RAM views Kuala Lumpur Kepong’s credit and sustainability ratings intact

Published on 02 May 2024.

RAM Ratings and RAM Sustainability on 30 April 2024 concluded that Kuala Lumpur Kepong’s (KLK or the Group) credit and sustainability ratings remain intact after their separate assessments on the recent unethical recruitment allegations highlighted by media statements recently. On 26 April 2024, KLK launched an investigation with all relevant parties and stated to enlist an independent third-party to conduct an unbiased assessment. Concurrently, KLK had temporarily halted incoming arrivals of foreign workers from Nepal while the investigation is ongoing.

In relation to the above, RAM Ratings and RAM Sustainability had sought further clarification from KLK. After the review, RAM Ratings concludes that these allegations have no material impact to KLK’s AA₁/Stable credit ratings on its sukuk programmes. These allegations pertain to potential unethical recruitment practices by a sub-agent in Nepal that is not contracted by KLK or its subsidiary. As such, the repercussions, if any, are not expected to materially impact KLK’s credit metrics. KLK’s sukuk ratings were last affirmed on 6 October 2023.

RAM Sustainability had affirmed on 8 April 2024, KLK’s G₂ Sustainability Rating which remains intact. RAM Sustainability’s comprehensive assessment incorporates 36 analytical areas towards forming a holistic view of a company’s environmental, social and governance and positive impact footprint. RAM Sustainability had considered the Group’s strong governance and firm commitment to sustainable practices. The Group’s policies are aligned with the International Labour Organisation Declaration on Fundamental Principles and Rights at Work, and the United Nations Guiding Principles on Business and Human Rights. In 2023, KLK conducted a Human Rights Risk Assessment to assess 17 sites in Peninsular Malaysia. The risk assessment found the Group to be continuously improving in its efforts to eliminate its systemic and critical risk of forced labour. KLK also absorbs all recruitment and related fees and had already reimbursed all recruitment fees paid by the workers over the years, as per the Group’s No Recruitment Fee Policy. The necessary and appropriate actions taken by the Group to investigate the allegations give comfort to RAM Sustainability that this matter will result in further improvement to KLK’s recruitment process.

Analytical contacts

RAM Ratings Wong Ee Loo (603) 3385 2521 eeloo@ram.com.my	RAM Sustainability Amirah Jamil (603) 3385 2551 amirah@ram.com.my	Media contact Sakinah Arifin (603) 3385 2500 sakinah@ram.com.my

Thong Mun Wai (603) 3385 2522 munwai@ram.com.my

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RAM views Kuala Lumpur Kepong’s credit and sustainability ratings intact