Following the positive outcomes of IOI Corporation Berhad (IOI) Responsible Sourcing team’s supplier engagement for No Deforestation, No New Development on Peat and No Social Exploitation (NDPE) compliance in Q1 2023, we completed a total of eight visits in Q2 2023. There were three mill visits conducted in Sabah namely at Taner R&D Palm Oil Mill Sdn Bhd, Keningau Palm Oil Mill and Toupos Palm Oil Mill. Whereas in Peninsular Malaysia, two mill visits and three kernel crusher visits were conducted at Bukit Berembun Palm Oil Mill, Ladang Rompin Palm Oil Mill, Lee Oil Mills, Kilang Isi Sawit Sin Huat Hin and SHH Oil Mill.

The aims of these visits were to socialise IOI’s NDPE commitments, understand the gaps for effective implementation and provide technical advice on palm products’ quality aspect. The visits in Sabah were jointly organised with IOI Edible Oils Sdn Bhd (IOI EO). We also took the opportunity to visit our suppliers operating kernel crushing plants in Selangor namely Lee Oil Mills, Kilang Isi Sawit Sin Huat Hin and SHH Oil Mill. These visits were jointly organised with IOI Oleochemical Industries Berhad.

We have rectified the 2022 Tool-For-Transformation (T4T) self-assessment findings where we previously found that a small percentage of our suppliers have yet to commit to NDPE policies. During the Q2 2023 supplier engagement, we observed at least partial commitment to NDPE policies such as commitments to protect High Conservation Value (HCV) areas, zero burning and no child labour. Three of the engaged mills were relatively new to the T4T system and unable to complete the self-assessment in a timely manner. Other suppliers reported that they were unclear of the assessment questions and informed that their sustainability policy was under revision.

Identification of root causes had allowed the Responsible Sourcing team to channel appropriate technical advice to address gaps for NDPE implementation. We shared toolkits and resource materials with all the engaged suppliers. The objective was to guide our suppliers on the fundamental concepts on starting NDPE commitments. We have always encouraged our suppliers to be transparent about their operations, including supply chains, sourcing locations and any potential risks or challenges they face.

In striving towards a more meaningful supplier engagement programme, we offer assistance and collaboration programmes for our suppliers. Sharing our best practices, connecting them with resources and toolkits are among the assistance that we practise. We discussed in length on the importance of achieving better traceability information for Fresh Fruit Bunch (FFB) suppliers screening process and presented a simulation to illustrate on how achieving full traceability can benefit a mill to deliver the No Deforestation commitment.

In terms of palm product quality, theIOI EO team shared their own experience on quality testing, process troubleshooting and factors determining product quality. Additionally, innovative ideas on oil processing and facility handling for yield improvement were bilaterally explored during our engagements.

Continuous implementation of the NDPE policies is one of the pathways towards embracing a sustainable palm oil supply chain where palm products are efficiently produced with minimal disturbances on the environment and surrounding communities. IOI will continue to maintain and improve our implementation efforts, collaboration among stakeholders and execution of robust monitoring mechanisms to further drive positive change.