Sustainability Statement


OVERVIEW

The Company is a licence-holder of Sustainable Forest Management Licence Agreement 06/97 (“SFMLA 06/97”), covering an area of 71,293 hectare of natural forest in the Lingkabau Forest Reserve, Forest District of Kota Marudu, Sabah. Subsequently, the Company has on 12 April 2018 entered into a Sustainable Forest Management Licence Agreement (“Supplemental”) under the 100 years SFMLA 06/97 for conversion of 15,438.30 hectares into Protection Forest Reserve (“Class One”) and excise 10,195.28 hectares for socio-economic purpose. Pursuant to the exercise, the remaining licensed area is 45,659.42 hectares.

Our activities and commitments to Corporate Responsibility are consistent with the concept, principles and practices of the sustainable forest management to ensure the sustainability of our forest resources.

Under the SFMLA, we are mandated to manage the licenced forest area based on the principles of sustainable forest management “to ensure forest remaining large, healthy, diverse and productive”.

The principles of sustainable forest management entail the following:

In achieving the above principles, the Company has set the following Policy Statement:


FOREST RESOURCE MANAGEMENT

The forest management practices adopted by the Company are basically in line with those advocated by Sabah Forestry Department and comprise the following:


The table below depicts the key performance indicators of the forest resource management:


No.Performance measureTarget (ha)Achieved (ha)
1.Timber harvesting1,726 798
2.Silviculture treatment691 691
3.Timber plantation3732

The activity flow in timber harvesting is inordinately affected by the Coronavirus Disease (“COVID-19”) pandemic as movement was restricted and workers are reduced proportionately.


ENVIRONMENTAL PROTECTION

The mandatory requirement of Environmental Impact Assessment (“EIA”) for activities associated with land development and utilization of natural resources in Sabah is stipulated in the Conservation of Environment Enactment 1996 and the Conservation of Environment (Prescribed activities) order 1999.

Three phases of EIA for Industrial Tree Plantations area and one phase of EIA for Natural Forest Management (“NFM”) area have been approved separately by the Environmental Protection Department of Sabah in 2005 and 2007. In 2020, all Environmental Compliance Reports (“ECR”) of the areas were submitted by the environmental consultant of the Company to the Environmental Protection Department of Sabah without any major concerns raised.

Pursuant to the above-mentioned rezoning exercise and in accordance to Section 12E(1) Environmental Protection Enactment 2002, the Company has updated the EIA with the cancellation of the of former EIA with the updated version approved by Environmental Protection Department on the 6 February 2020. The Approval letter issued by EIA is enclosed herewith.




SOCIAL AND COMMUNITY DEVELOPMENT

Community Outreach 2020

With the outbreak of COVID-19 pandemic globally, its far reaching effects has an impact on the capability of the Company’s Community Outreach effort during the year with the implementation of the Movement Restriction Order (“MCO”) as well as Inter-District Travel Ban by both state and Federal National Security Council.

Although efforts to engage the community via dialog session was not realised, some community leaders has reached out via informal communications such as WhatsApp or vitual conference call for assistance and to update the current situation of the community.

One such community is Kg. Abuan. At the begining of the Movement Control Order, the Majlis Pengurusan Komuniti Kampung (“MPKK”) of the community has reach out to the Company through Community Liaison Executive requesting for aid. The Camp Manager with a few camp personels delivered and presented the food baskets to the community leaders and in turn distributed among the community members.

Date
15 April 2020

Details
MPKK Kg. Abuan has communicated to the Company through Community Liaison Executive via WhatsApp requesting aid for the community.


Date
29 April 2020

Details
The Camp Manager with a few camp personels delivered and presented the food baskets to the community leaders and in turn distributed among the community members.


Picture showing Food baskets delivered to the community leaders of Kg. Abuan.

On 22 December 2020, the Company has given a donation to the Borneo Evengelical Church of Kg. Abuan for the community’s yearly Christmas celebration.

Picture: Camp staff presenting the donation to the Borneo Evengelical Church of Kg. Abuan's representative

ECONOMIC, ENVIRONMENTAL AND SOCIAL (“EES”)

In line with the Sustainability Reporting Guide and Toolkits (“the Guide”) released by Bursa Malaysia Securities Berhad (“Bursa Malaysia”) on 8 October 2015 and the subsequently released second edition on 13 December 2018, all Listed Issuers are called to adopt a holistic approach to business management, taking into consideration the Economic, Environmental and Social (“EES”) key matters alongside financial implications.

The Company has identified 2 stakeholders whom have high influence and high dependence to the Company. There are the Contractor and Employee. Based on the Materiality Matrix arising from the EES, the areas have significant impact and influence to the Company are illustrated in the table below:

No.Stakeholder Relevant EES Matters
1.Contractor • Labor and Management Relations
• Weather Condition
2.Employee Training and Education

CONTRACTOR

Contractor have high influence and high dependence to the Company and their most significant impact and influences key matters are Labor and Management Relations and Weather Conditions.

In our Company, the engaged contractors for harvesting, silviculture, liberation treatment, planting and maintenance were all briefed prior to commencement of activities on requirements to observe environmental mitigations such as prohibition of any activities along the river/stream reserve. They also observed the open burning prohibitions and wildlife protection. Any violation is subject to a penalty as stipulated in the License Agreement.

Labour and Management Relations

During the year, with regard to labor and management relations, the Company have incorporated in the engagement contract agreement that the contractor shall ensure that all the employees involved in forestry activities in the assigned area are registered with Forestry Department by filling of the ‘Certificate of Identity’ and ensure that the annual endorsement of the certificate is carried out. The contractors have also initiated effort to regularise its workers with all the relevant authorities. For the forthcoming year, the Company plans to inculcate more safety and environmental awareness to the contractors.

For the year 2020, all contractors have not breached the rules and regulation with respect to safety related and environmental mitigation principles though no TLAS audit was carried out due to restructure of the state government TLAS auditing. Nevertheless, the Company will continue to further educate the Contractors in order to make them adopt a safe and harmonious working etiquette.

Weather Conditions

The contractors have submitted the weather chart to the site office on weekly basis in 2020. The rainfall occurrences are counter checked by the Company field rangers and the record kept in the site office. The summary of the monthly rainy days in year 2020 as the table below:



EMPLOYEE

The Company having a diverse, multi-cultural workforce consisting of skilled and technical employee including team of professional in the senior management level.

During the MCO which begin in March 2020, the Company has put in place multiple preventive and control measures as the workplace to lower the risk and stop the spread of COVID-19 infection as per the established SOP on new normal practices. In keeping the welfare of the workforce during COVID-19 pandemic, the Company has implemented various measures such as:-

▸ Promote hygiene and regular sanitisation in the workplace.
▸ Provided hand sanitisers and disinfectant kit at hot spot areas.
▸ Ensured physical distancing and mandatory wear face mask at all times in the workplace;
▸ Enforced mandatory screening pre-entry, measure body temperature, masks and hand sanitisers.
▸ Displaying the relevant information/notices on prevention and procedures within the offices.

Despite the quick transition to the work from home (“WFH”) model in the face of COVID-19, we enforced WFH on rotation basis for all employees. We continue to take necessary precautions on COVID-19 to address the health and safety of our employees at all times.

The above-mentioned practices are on-going and the Company will implement additional measures when necessary to prevent the spread of COVID-19 pandemic.

Training and Education

The Company places much emphasis on its staff training and development programmes. As with its Board of Directors, staff are also encouraged to undertake continuing professional education to equip themselves with the latest technical and statutory updates to stay relevant and be prepared for their jobs.

Due to COVID-19 pandemic, all physical training was suspended. However, regular updates on the available webinars were notified to the relevant employees through emails. In the financial year 2020 (“FY2020”), a total of 11 trainings in relation to Sustainability within the Company’s operations were attended by different level of employees. The summary of the relevant trainings is listed below:


No.Continuing Education Programme AttendedMonth Attended
1.Sabah Forest and Timber Industry Master PlanFeb 2020
2.FPLC Webinar COVID-19 Series: Paradigm Shift in Human Capital Management July 2020
3.Workshop Forest Beyond Timber July 2020
4.The Cooler Earth: Sustainability Summit 2020: Profits with a purpose September 2020
5.The Cooler Earth Sustainability Summit 2020: Environmental Reporting September 2020
6.The Cooler Earth Sustainability Summit 2020: Building a Sustainable WorldSeptember 2020
7.The Cooler Earth Sustainability Summit 2020: Resilient Cities and Communities September 2020
8.The Cooler Earth Sustainability Summit 2020: Managing Change for Sustainability September 2020
9.The Cooler Earth Sustainability Summit 2020: Tools for Environmental Risk ManagementOctober 2020
10.The Cooler Earth Sustainability Summit 2020: Green Finance October 2020
11.The Cooler Earth Sustainability Summit 2020: ESG Financing for Business October 2020

Moving forward, the Company will continue the practice of measuring, disclosing and accounting for corporate performance towards the goal of sustainable development. Sustainability key matters are complex, inter-connected and continually evolving. Thus, this report essentially describes the Company’s performance in its forest resource management, and initiatives on environmental and social responsibility in FY2020, and presents our commitments for the future years.


SUSTAINABILITY GOALS

In line with the Company’s sustainability goals, we have actively sought to improve and raise the level of sustainability within our operations while addressing social, environmental and economic challenges. The Company has adopted several sustainability policies aimed at delivering our commitment without compromising on performance. These apply to the Company and its subsidiary companies.

PolicyReviews/Updates
Code of Conduct & Business EthicMarch 2021
Whistle Blowing PolicyMarch 2021
Board Diversity PolicyMarch 2021
Succession Planning PolicyAugust 2020
Occupational Safety and Health PolicyNovember 2019
Risk Assessment Profile StatementNovember 2019
Environmental and Biodiversity Policy November 2019
Anti-Bribery & Corruption PolicyNovember 2019

The Company has in line with Government’s directive urged all business entities to have a Standard Operating Procedures (“SOP”) for the New Normal Practices in the work place. A copy of the SOP was extended to all employees and uploaded to Company’s website.

In terms of risk management of the Group, a sound risk management framework has been established for managing risks affecting the business and operations, which are detailed in the Statement on Risk Management and Internal Control section of this Annual Report. It clearly outlines the duties and responsibilities at each level within the Group as well as the accountability in implementing the risk management processes and internal control system. For the coming financial year 2021, the Company shall arrange for the RMC to meet at least once to assess various sustainability issues and developments in its annual Risk Assessment and Management process.