Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• First company in Indonesia to join the Roundtable on Sustainable Palm Oil (RSPO) in 2004
• First plantation in Indonesia to attain RSPO certification in 2009
• First smallholder scheme in Indonesia to attain RSPO certification in 2010
• First major group to achieve 100% RSPO P&C certification for all mills with plantations in 2012
• Successfully completed the first five-year cycle of RSPO P&C certification for eight mills in 2017
• 13 methane capture facilities installed at mills, exporting surplus electricity to the national grid since 2014
• No deforestation of High Conservation Value (HCV) area and High Carbon Stock (HCS) forest.
• No development of peatland regardless of depth.
• Minimising the carbon footprint of our operations.

Social Achievements

• Undertook labour verification assessment with Verité in 2016
• Launched an integrated grievance mechanism in 2016
• Conducted a living wage assessment in 2017
• Launched Extension Services Programme (ESP) for independent smallholders in 2017
• Strong “no child labour” policies.
• Protection of workers’ rights on minimum wage and ensuring permanent worker status after three months of probation.
• Low precarious employment rate.
• Good maternity policies.

Governance Achievements

• Published a comprehensive Sustainability Policy extended to third-party suppliers in 2014
• Obtained membership approval for the Palm Oil Innovation Group (POIG) in 2015
• Undergone POIG verification audit in 2016 and 2018
• Achieved compliance with IT SNC for all mills by April 2018

Climate Goals & Targets

Environmental Challenges

• Challenges in ongoing engagements with smallholders and third-party suppliers
• Potential conflict between environmental protection and social development agendas in Indonesia
• Challenges in achieving full compliance with POIG due to issues such as HCS, GHG emissions, food security, participatory land use planning, water equity and full traceability to FFB sources
• Securing government support for and establishing the economic benefits of certification
• Cost of certification exceeding tangible economic benefit
• Difficulty in tracing back the ownership of land for smallholders, especially independent smallholders

Mitigation Strategies

• Constant focus on the benefits of sustainability, supported by robust processes and policies
• Leveraging political developments and momentum to drive sustainable practices among suppliers
• Collaborative landscape projects across Indonesia
• Developing and releasing a Sustainability Policy Implementation Plan in June 2018
• Developing an action plan to address non-conformances identified in POIG audits
• Engaging with third-party suppliers through primary and secondary supplier approaches
• Implementing Extension Services Programme (ESP) to improve smallholder livelihoods
• Collaborating with external stakeholders to maximize positive impacts

Supply Chain Management

Supplier Audits: Mill verifications conducted on at least one mill for every 10 supplier parent company groups (2017)

Responsible Procurement

• Sustainability Policy extended to third-party suppliers
• Traceability to mill and plantation
• Primary and secondary supplier engagement approaches
• Controlled Purchase mechanism for managing grievances
• Remote monitoring of supplier concessions for deforestation activity
• Due diligence on prospective suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Drought caused by El Niño

Reporting Standards

Frameworks Used: GRI, RSPO, ISPO, ISCC, POIG

Certifications: RSPO, ISPO, ISCC

Environmental Metrics

ESG Focus Areas

• Livelihoods of smallholders, workers, and communities
• Environmental protection (fire prevention, deforestation)
• Education
• Infrastructure development

Environmental Achievements

• Avoided emission of 537,965 MT CO2e in 2019 through methane capture facilities
• 74 villages included in Fire Free Village Program as of December 2019
• 85% drop in fire incidents within Musim Mas concessions from 2015 to 2019

Social Achievements

• 3,587 smallholders/villages covered under smallholder programs
• 1,733 scheme smallholders achieved RSPO certification, covering 3,494 ha of land
• Scheme smallholders earn 60% higher income compared to minimum wage in Riau Province
• 9 schools with 20 learning units, 5,983 students enrolled (47% girls)
• More than 13,000 households provided with access to safe drinking water and electricity

Governance Achievements

• Strict No Deforestation, No Peat, No Exploitation (NDPE) policy
• RSPO P&C certification for all plantations and mills
• Compliance with Indonesian government regulations on smallholder land allocation

Climate Goals & Targets

Environmental Challenges

• Slash-and-burn land clearing practices by smallholders
• Difficulty attributing causes of fires
• Historical land conversion on peatland
• Increasing global demand for palm oil
• Lack of access to education and infrastructure in rural areas
• Uncertainty of land ownership for smallholders
• Low yields among smallholders

Mitigation Strategies

• Strict zero-burning policy for all operations and suppliers
• Fire Free Village Program (MBA) engaging 74 villages
• Training on alternative land-clearing methods and fire prevention
• Financial incentives for fire-free villages
• Providing quality seeds, fertilizers, and technical guidance to smallholders
• KKPA and KKD programs to support smallholders
• Building schools and providing scholarships
• Infrastructure development programs (water, electricity, roads, religious centers)

Supply Chain Management

Responsible Procurement

• Zero-burning policy for suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Forest fires
• Drought

Opportunities

• Methane capture for electricity generation

Reporting Standards

Frameworks Used: RSPO

Certifications: RSPO

UN Sustainable Development Goals

• Goal 1 (No Poverty)
• Goal 4 (Quality Education)
• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 8 (Decent Work and Economic Growth)
• Goal 15 (Life on Land)

Programs contribute to these goals through poverty reduction, education access, infrastructure development, renewable energy, job creation, and environmental protection.

Awards & Recognition

• 'Best School in the District' for several schools
• National recognition from the President for a teacher
• Adiwiyata School Award for environmental awareness
• Principal Achievement at the Provincial Level

Environmental Metrics

ESG Focus Areas

• Improve the Lives of Smallholders, Workers, and Communities
• Deliver Positive Environmental Impacts
• Maintain Responsible and Enduring Relationships with Suppliers, Customers, and Stakeholders
• Drive Innovation in Sustainable Practices

Environmental Achievements

• Reduced GHG emission intensity by 47% against 2006 baseline (RSPO-certified mills)
• Achieved mill water usage intensity of 1.17 m3/MT FFB, the lowest since 2016
• Avoided the release of 544,220 MT CO2e using 15 methane capture facilities
• 100% zero-waste mills
• 28,210 ha set aside for conservation – 14% of total titled land

Social Achievements

• 90% of workers unionized, up from 81% in 2019
• 100% of scheme smallholders covered by KKPA and VDP programs
• 5,785 ha of scheme smallholders RSPO-certified (88%) as of June 2021
• >32,000 independent smallholders covered by Musim Mas programs
• CSR contributions of IDR 22 billion – 57% allocated to schools

Governance Achievements

• Updated Sustainability Policy 2020-2025 launched
• 100% mills with plantations RSPO-certified (as of June 2021)
• 11 out of 17 PTs are ISPO-certified (65%) (as of August 2021)
• 97% of supplying mills submitted NDPE commitments
• Achieved 83% traceability to place of production, up from 60% in 2019

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting field outreach and some sustainability efforts
• Seven fatalities in 2020, highest rate in past few years
• Increase in GHG emission intensity in 2020 due to new mill commissioning and increased replanting
• Challenges in engaging independent smallholders due to complex barriers
• Supplier non-compliance with NDPE commitments

Mitigation Strategies

• Adopted flexible working conditions and work-from-home arrangements
• Implemented strict health and safety measures and COVID-19 taskforces
• Investigated employee fatalities, reviewed safety protocols, and educated employees on safety measures
• Established Smallholder Hubs to support independent smallholders
• Engaged suppliers through workshops, commitments, and SATs, implemented Controlled Purchase Protocol (CPP)

Supply Chain Management

Responsible Procurement

• NDPE commitments from suppliers
• Musim Mas SAT
• NDPE workshops

Climate-Related Risks & Opportunities

Physical Risks

• Forest fires

Transition Risks

• Regulatory changes

Opportunities

• Improving yields and reducing reliance on emission sources

Reporting Standards

Frameworks Used: GRI Standards: Core option

Certifications: RSPO, ISPO, ISCC

Third-party Assurance: Ernst & Young LLP

UN Sustainable Development Goals

• SDG 2
• SDG 4
• SDG 6
• SDG 8
• SDG 12
• SDG 13
• SDG 15
• SDG 17

Musim Mas' sustainability pillars and material topics are aligned with specific targets of the SDGs. Primary SDGs are those where Musim Mas has the greatest impact; secondary SDGs represent indirect contributions.

Awards & Recognition

• PROPER Green Awards in 8 categories
• EcoVadis Bronze Medal

Environmental Metrics

ESG Focus Areas

• Improve the Lives of Smallholders, Workers and Communities
• Deliver Positive Environmental Impacts
• Maintain Responsible and Enduring Relationships with Suppliers, Customers, and Stakeholders
• Drive Innovation in Sustainable Practices

Environmental Achievements

• Upstream GHG emission intensity reduced by 53% against 2006 baseline
• Successfully commissioned 17th methane capture facility; 619,749 MT CO2e avoided emissions from all facilities
• >95% of upstream energy consumption from renewable sources
• >26.5 million kWh of electricity exported to the national grid
• Operating 100% zero waste mills
• Managing 28,460 ha of conservation area (>14% of total titled land)

Social Achievements

• Launched new YouTube video series highlighting women at Musim Mas
• Operating 48 childcare centres, 10 kindergartens and 13 schools
• 100% of employees in Indonesia covered by collective bargaining agreements
• 31% reduction in accident rates since 2018
• 75% reduction in severity rates since 2018
• Contributed > IDR 30.2 billion to CSR
• 98% of workers’ school-age children enrolled in schools
• 54 scholarships awarded to deserving students
• >30 ha allocated for workers’ community gardens
• Providing 26 clinics and >2,600 first-aid kits
• 100% of scheme smallholders covered by Musim Mas programs
• IDR 390 billion (~USD 25 million) income generated from FFB sales
• Conducted 210 scheme smallholder training sessions
• 86% of scheme smallholder land is RSPO certified
• 40,708 independent smallholders covered by Musim Mas programs
• Successfully launched 2 new Smallholders Hubs: Sungai Linau and Sambas
• Trained 347 Village Extension Officers (VEOs), up from 177 in 2021
• 4,529 smallholders received training from VEOs, up from 1,051 in 2021 (>4x)
• 3,537 smallholders RSPO certified and 1,600 ISPO certified with Musim Mas support to date
• Smallholders have collectively earned ~USD1.3 million in RSPO credits to date

Governance Achievements

• Revised our Sustainability Roadmap
• Launched new Sustainable Sourcing Strategy for coconut operations
• Updated Sustainability Policy with commitments to United Nations Convention on the Rights of the Child (CRC) in 2023
• Joined the United Nations Global Compact (UNGC)
• Received 2022 RSPO Award of Excellence for Smallholder Impact for outstanding contributions toward smallholder livelihoods
• Awarded EcoVadis Gold Medal
• Ranked 6th out of 100 companies in 2022 ZSL SPOTT assessment (90.7% score)
• 2022 CDP ratings: Forests (A-), Climate Change (B), Water Security (B)
• Received new Blue PROPER rating for one of our mills
• Assessed in Global Child Forum Benchmark in 2022
• 100% of mills integrated with plantations certified to RSPO P&C
• 100% of Indonesian kernel crushing plants and refineries RSPO SCCS certified
• Our only refinery in Malaysia MSPO SCCS certified
• 25 units are ISCC-certified
• 100% PTs certified to ISPO as of July 2023

Climate Goals & Targets

Environmental Challenges

• Climate variability characterized by extended droughts, devastating fires, and intermittent floods
• Supply chain emissions contributing to more than 90% of the total emissions
• Challenges faced by Indonesian coconut industry in developing a comprehensive sustainable production standard
• Obstacles faced by coconut farmers like fluctuating market prices and insufficient income
• Collecting FFB supply data from FFB dealers and independent smallholders where crop flow is dynamic
• Addressing human and labour rights provisions in the No Exploitation component of NDPE
• Verifying No Exploitation compliance without an industry-wide tool

Mitigation Strategies

• Published Biodiversity and Climate Resiliency Action Plan 2022
• Signed Agricultural Sector Roadmap to 1.5°C at COP27 to reduce emissions from land use change
• Began life cycle assessment (LCA) pilot on selected downstream products
• Developing Scope 3 emissions model based on GHG Protocol Guidance
• Completed preliminary assessment of risks, challenges, and opportunities facing the Indonesian coconut industry
• Developing a methodology to track and report deforestation-free supply based on our traceability and risk management frameworks
• Developing a Human Rights Due Diligence (HRDD) strategy
• Completed Verité Southeast Asia baseline assessment in 2022
• Engaging suppliers on NDPE best practice
• Developing a digital platform for our SATs to streamline compiling and tracking results
• Partnered with the Consortium of Resource Experts (CORE) to engage FFB dealers in Peninsular Malaysia
• Developed engagement materials to train our coconut suppliers

Supply Chain Management

Supplier Audits: 602 CPO and PK suppliers assessed annually; 97.3% low-risk, 2.7% medium-risk, 0% high-risk in 2022

Responsible Procurement

• NDPE commitments
• Supplier Code of Business Conduct
• Musim Mas Self-Assessment Tool
• NDPE Implementation Reporting Framework (IRF)
• Controlled Purchase Protocol (CPP)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding
• Fires

Transition Risks

• Regulatory changes (e.g., EUDR)
• Market shifts

Opportunities

• Development of energy-efficient products
• Methane capture
• Renewable energy

Reporting Standards

Frameworks Used: GRI Standards, GRI 13 Sector Standard for Agriculture, Aquaculture, and Fishing, SASB guidelines

Certifications: RSPO P&C, RSPO SCCS, MSPO SCCS, ISCC, ISPO

Third-party Assurance: Ernst & Young LLP (EY)

UN Sustainable Development Goals

• SDG 2
• SDG 4
• SDG 6
• SDG 8
• SDG 12
• SDG 13
• SDG 15
• SDG 17

Detailed explanation of Musim Mas' contributions to each SDG provided in the report's appendices.

Sustainable Products & Innovation

• Specialty fats for food and beverage industry
• Functional blends for food and beverage applications

Awards & Recognition

• 2022 RSPO Award of Excellence for Smallholder Impact
• EcoVadis Gold Medal

Environmental Metrics

ESG Focus Areas

• Improve the Lives of Smallholders, Workers, and Communities
• Deliver Positive Environmental Impacts
• Maintain Responsible and Enduring Relationships with Suppliers, Customers, and Stakeholders
• Drive Innovation in Sustainable Practices

Environmental Achievements

• Exceeded target of reducing upstream GHG emission intensity by 55% against 2006 baseline, two years ahead of schedule
• >95% of upstream energy consumption from renewable sources
• Achieved 98% traceability to plantation (TTP)
• Achieved 99.41% deforestation-free supply chain
• Maintained 100% completion of NDPE IRF profiles for all refineries
• Managing 28,513 ha of conservation area
• Covered 75 villages under the Fire-Free Village Program (>457,000 ha)

Social Achievements

• 100% employees in Indonesia covered by collective bargaining agreements
• >58% reduction in accident rates since 2019
• 98% of workers’ school-age children enrolled in schools
• Operating 47 childcare centers, 11 kindergartens, and 14 schools
• 93 scholarships awarded to deserving students
• Providing 26 clinics and >2,600 first-aid kits
• Contributed >IDR 32.9 billion (~USD 2.1 million) to CSR
• Pledged SGD 5 million (~USD 3.7 million) in donations to charitable causes
• Supported 4,586 smallholders in obtaining RSPO certification, and 1,959 smallholders in obtaining ISPO certification

Governance Achievements

• Published new addendum to Sustainability Policy on Commitment to Children and Human Rights
• Committed to achieving net-zero emissions by 2050 through Science Based Targets Initiative (SBTi)
• 100% of mills integrated with plantations certified to RSPO P&C
• 100% of midstream and downstream palm processing facilities certified to RSPO SCCS
• 100% upstream entities (PTs) certified to ISPO
• 25 units are certified to ISCC
• Only refinery in Malaysia is certified to MSPO SCCS

Climate Goals & Targets

Environmental Challenges

• Three fatalities at upstream operations in 2023
• Challenges in ensuring independent smallholders adhere to GAPs
• Leakage market and negative consumer perception in palm oil sector
• Challenges in measuring and accounting for Scope 3 emissions
• Increasing regulatory requirements (EUDR, CSRD, CS3D)
• Greenwashing and misleading sustainability claims
• Managing climate-related physical risks (pests, diseases, storms, floods, fires, droughts, heatwaves)
• Managing climate-related transition risks (regulations, carbon pricing, market shifts, alternative palm oil development, peatland use)

Mitigation Strategies

• Implementing corrective actions to minimize risk of accidents recurring (training, HIRA review, PPE education)
• Trialling a composting project to improve fertilizer application
• Engaging with the entire industry, particularly companies that have yet to embrace the NDPE agenda
• Setting ambitious targets aligned with the SBTi
• Implementing our Sustainability Policy and NDPE commitments
• Adapting comprehensive risk assessment measures and establishing specific supply and processing chains
• Preparing for other forthcoming EU regulations
• Aligning reporting process with the Taskforce on Climate-related Financial Disclosures (TCFD) framework
• Implementing flood mitigation and adaptation measures
• Implementing community engagement programs (Fire Free Village Program)
• Adopting comprehensive measures to preserve surface water and groundwater quality
• Implementing OSH measures to protect workers from heat-related illness
• Investing in methane capture facilities
• Exploring renewable energy alternatives
• Working towards traceability to plantation and full supplier visibility to eliminate deforestation in supply chains
• Engaging with suppliers on NDPE policy commitments
• Verifying NDPE progress using evidence-based approaches
• Supporting smallholders with national certification schemes (ISPO)
• Supply chain engagement for coconut production
• Resolving external complaints and grievances
• Bringing suppliers into compliance with NDPE requirements

Supply Chain Management

Supplier Audits: 601 CPO and PK suppliers assessed in 2023

Responsible Procurement

• NDPE commitments
• NDPE workshops
• Musim Mas Self-Assessment Tool (SAT)
• RSPO, ISPO, MSPO, ISCC certifications

Climate-Related Risks & Opportunities

Physical Risks

• Pest and diseases
• Storms
• Floods
• Fires
• Droughts
• Rising temperatures & heatwaves

Transition Risks

• Climate or Forestry Regulation
• Carbon Pricing Mechanisms
• Shift in Customer Preferences Towards Palm Alternatives
• Development of Lab-Grown Palm Alternatives
• Peatland Use

Opportunities

• Increased Use of Precision Agriculture
• Increased Use of Renewable Energy
• Use of Technology-Assisted Production Tools
• Development of Climate-Resilient Palm Variants

Reporting Standards

Frameworks Used: GRI Standards, GRI 13 Sector Standard for Agriculture, Aquaculture, and Fishing, SASB guidelines, TCFD requirements

Certifications: RSPO, ISPO, ISCC, MSPO

Third-party Assurance: Ernst & Young LLP (EY)

UN Sustainable Development Goals

• 2
• 4
• 6
• 8
• 12
• 13
• 15
• 17

Detailed in Musim Mas’ Contributions to the SDGs section of the report

Sustainable Products & Innovation

• Musim Mas GS Series of oil palm planting material
• Specialty fats for food and beverage and animal feed industries

Awards & Recognition

• CDP double ‘A’ score for Forests and Water Security
• RSPO Excellence Award for Smallholder Impact
• Sawit Indonesia Award for “Most Reputable Palm Oil Company in Empowering Independent Smallholders”