RAM Sustainability affirms KLK’s sustainability rating, upgrades environment rating

Published on 08 Apr 2024.

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In its annual review, RAM Sustainability has affirmed Kuala Lumpur Kepong Berhad’s (KLK or the Group) overall Sustainability Rating of Gold₂ (G₂). The Group's Social, Governance and Positive Impact Ratings have also been affirmed at G₂, G₃ and G₂, respectively. 

Meanwhile, the Group’s Environment Rating has been upgraded from G₃ to G₂, premised on its strong climate change mitigation commitment, seen in the target-setting of carbon emissions and disclosure of emissions in accordance with the Greenhouse Gas (GHG) Protocol in FY Sep 2023. KLK aims to reduce its GHG intensity by 25% by 2029/2030 (benchmarked against base year of 2018/2019) and achieve net zero emissions by 2050 (Scope 1 and Scope 2 emissions).

Overall, KLK has continued to show improvement in its sustainability governance. Sustainability programmes previously mooted under Project SHIFT – an initiative to close the Group’s sustainability gaps – have begun to be implemented, among which is KLK’s Sustainability Commitments announced last year. The Sustainability Commitments refer to seven time-bound commitments covering the areas of carbon management, human rights, health and safety, traceability, conservation and biodiversity, innovation and inclusivity, and disclosures.

Further supporting the Environment Rating is KLK’s holistic Sustainability Policy, which addresses key sustainability obligations of the palm oil industry such as commitment to the No Deforestation, No Peat and No Exploitation (NDPE) policy, protection of High Conservation Value areas, net greenhouse gas reduction, and zero burning. The Group’s continued advocacy of sustainable palm oil production and the integration of smallholders into its supply chain are also viewed favourably.

KLK is dedicated to improving human rights measures at its operations, documenting its commitments on this front in the Group’s Sustainability Policy, NDPE policy and Code of Conduct. Following an assessment of its East Malaysia (Sabah) operations in 2021 and two of its operations in West Malaysia and Indonesia, KLK conducted a Human Rights Risk Assessment to assess 17 sites in Peninsular Malaysia in fiscal 2023. It has also established a No Recruitment Fee Policy, aligned with the International Labour Organisation Declaration on Fundamental Principles and Rights at Work, and the UN Guiding Principles on Business and Human Rights.

While KLK’s acquisition of KLK Sawit Nusantara Berhad (formerly known as IJM Plantations) in 2021 has proportionately diluted the Group’s oil palm planted area that is certified by the Roundtable on Sustainable Palm Oil (RSPO), it targets full certification by Q3 2025. We do not expect the proposed acquisitions of two Indonesian plantations from Batu Kawan Berhad, announced on 14 December 2023, to moderate KLK’s RSPO certification as the plantations have been managed by the Group.

RAM Sustainability is a provider of sustainability services and Environment, Social and Governance (ESG) analytics. Incorporated on 31 May 2000, it is a wholly owned subsidiary of RAM Holdings Berhad. RAM Sustainability is the first ASEAN-based provider of ESG ratings and second opinions. It also has the distinction of being the first Registered Observer of the International Capital Market Association’s GBP, Social Bond Principles and Sustainability Bond Guidelines in the ASEAN region. On 12 August 2020, we became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme, after having been awarded the status by the Climate Bonds Standards Board. For further details, see https://www.ram.com.my/sustainability.   

 
Analytical contact
Amirah Jamil
amirah@ram.com.my

Media contact
Sakinah Arifin
sakinah@ram.com.my

 

This external review or second opinion is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for an investor, nor does it involve any audit by RAM Sustainability. 

Published by RAM Sustainability Sdn Bhd 

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