Sustainability Report Card
Asian Agri: Three no’s underscore drive to make palm oil more sustainable
Palm oil giant Asian Agri’s commitment to sustainable practices and attainment of specific certifications, alongside its No Deforestation, No Peat and No Exploitation (NDPE) commitment feature heavily in its latest sustainability report.
It has also attained certifications such as Indonesian Sustainable Palm Oil (ISPO), Roundtable on Sustainable Palm Oil (RSPO) and International Sustainability and Carbon Certification (ISCC), demonstrating a commitment to meeting recognised sustainability standards.
Furthermore, Asian Agri reports a 90% reduction of methane emissions in its 10 biogas plants, as well as a total of 35,607 scheme and corporate shared value (CSV) smallholders. It also works with Fresh Fruit Bunches (FFB) suppliers, who fall into two categories: outgrowers (companies that own plantations of at least 25 hectares) and smallholders (individuals who own plantations smaller than 25 hectares).
The report states: “These smallholders supply to our mills through various channels, such as direct (where smallholders directly sell their produce to us), group (through associations and cooperatives) and agents / dealers (through an independent intermediary).”
Areas for improvement
However, the report’s positive aspects are accompanied by areas for improvement apparent in the company’s sustainability reporting.
There are three primary aspects in which Asian Agri’s sustainability reporting is lacking: quantitative metrics, labour and social practices, and burning incidents.
- Lack of quantitative metrics: While Asian Agri discusses its commitment to sustainability and responsible practices, the report lacks specific quantitative metrics to assess the actual impact of these initiatives. For instance, the report could provide data on the reduction of deforestation and greenhouse gas emissions (GHGs) — apart from methane — as a result of the company’s sustainability efforts.
- Labour and social practices: The report briefly mentions adherence to standards on workers' welfare, equal rights, and a zero-tolerance policy for child labour and harassment. However, specific details about measures taken to ensure fair labour practices, including employee well-being and benefits, would strengthen the social responsibility aspect of the report.
- Burning incidents: The report mentions zero incidents of corruption and anti-competitive behaviour but only briefly acknowledges a non-compliance case related to the breaking of the Palm Oil Mill Effluent (POME) pond embankment in 2021. More information on the incident, its causes, and preventive measures taken would enhance transparency.
Comprehensive — but is it enough?
The sustainability reporting of Asian Agri reveals a comprehensive approach towards environmental and social responsibility. The company's commitment to monitoring its suppliers' plantations, especially those near high-risk areas, showcases a pro-active stance towards preventing non-compliance with social and environmental policies. The use of mapping and spatial analysis to ensure plantations are not located within illegal areas is commendable, reflecting an effort to uphold transparency and legality in their operations.
Additionally, the company's focus on food safety is highlighted by its adherence to Good Manufacturing Practices (GMP) certification and Kosher certification. The commitment to optimising waste oil and separating food-grade oil from non-food-grade oil demonstrates a dedication to producing healthy food-grade crude palm oil. Moreover, the absence of incidents related to health and safety impacts of products in 2022 is a positive indicator.
Asian Agri's acknowledgment of climate change risks to its operations and commitment to achieving Net-Zero Emissions by 2030 is commendable. The strategies to reduce emissions, promote renewable energy use and engage in sustainable palm oil production align with global climate goals. The company's transparency regarding changes in the calculation methodology for fuel consumption and electricity consumption enhances the credibility of its reporting.
Furthermore, its commitment to sustainable palm oil production and intention to achieve Net-Zero Emissions contribute positively to its carbon footprint reduction. Its emphasis on renewable energy sources, such as bio-mass and bio-gas, showcases a commitment to environmental conservation and mitigating climate-related risks.
At the same time, the company's dedication to bio-diversity and conservation, with a focus on managing 100,000 hectares of natural ecosystems, reflects an understanding of the importance of preserving bio-diversity in their operational areas. Its 'Zero Burning' and 'No-Peat' policies demonstrate a commitment to preventing forest fires and preserving peatland ecosystems.
Moreover, the report highlights an increase in organic waste production, linked to higher crude palm oil (CPO) production. While it acknowledges that CPO production may lead to increased waste, it is essential for Asian Agri to continuously explore strategies to manage and reduce waste generation to ensure long-term sustainability.
Palm oil mill effluents (POME) management is discussed in detail, outlining the treatment processes and adherence to regulatory standards. While the use of POME as organic fertiliser and compliance with environmental regulations indicate a commitment to mitigating environmental impact, the report lacks clarity on the measures taken to address the increase in organic waste production.
The attention given to pest management and chemical usage showcases a commitment to minimising the environmental impact of agricultural practices, and the focus on reducing chemical usage and incorporating natural interventions is commendable, contributing to a healthier and more sustainable plantation environment.
The report details the selective application of pesticides and the prohibition of certain hazardous pesticides, emphasising safety measures for workers. At the same time, Asian Agri’s R&D efforts to develop more resistant plant material and control root pathogens demonstrate a proactive stance on sustainable agriculture. The report's transparency about the challenges faced, such as the rise in pesticide usage and global fertiliser price fluctuations, adds credibility to the document.
The devil’s in the details
Despite the aforementioned positives, the report could be improved with more specific details on Asian Agri’s progress toward achieving Net-Zero Emissions by 2030 and the steps taken to enhance traceability techniques through supply chain digitalisation. Additionally, a more detailed breakdown of GHG emissions sources and reduction measures would enhance transparency.
it could also improve by providing more detailed and quantifiable information on its environmental and social impact, enhancing supply chain transparency and providing specific details on stakeholder engagement and labour practices. These improvements would enhance the credibility and transparency of the sustainability reporting process.
