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Sustainability Report 2023 – A Message from the Chairman

Posted: Jun 03, 2024 6 minute read GAR 4 Likes

Following a remarkable year in 2022, we demonstrated our resilience and delivered solid results in FY2023.This performance is a testament to our ability to navigate the complexities of our industry, including challenges such as Crude Palm Oil (CPO) price fluctuations, unpredictable weather conditions, a dynamic geopolitical environment, and the backdrop of a slowing global economy. Our strategic focus on margin optimisation across the value chain has been instrumental in our success, fortifying our cash flow resilience and maintaining a robust balance sheet.

Normalised palm oil prices and reduced output impacted the plantation business performance. Despite these challenges, the business secured a healthy EBITDA margin of 24 percent or US$478 milion in FY2023.

Our plantations produced 2.94 million tonnes of palm product output, a slight decline attributable to the reduced mature area from our replanting activities and the high rainfall experienced in the early part of the year.

Nevertheless, palm product yield reached 5.3 tonnes per hectare, which is amongst the industry’s highest. To sustain plantation production growth, we will continue rejuvenating our plantations by replanting with newer generation, high-yielding planting materials.

Leveraging scale and technological advancements in precision agriculture remain integral to GAR’s long-term strategy.

2.94 million tones of palm product output or 5.3 tonnes per hectare
Downstream operations sustained robust performance, contributing significantly to consolidated EBITDA. Benefitting from integrated processing facilities, global distribution capabilities, a broad diversified product portfolio, and a large customer base, the business expanded sales volume, reaching over 100 countries. Achieving a solid EBITDA margin of 5.3 percent or US$507 million, GAR’s downstream segment underscores its resilience and adaptability to evolving market conditions.

Continuous improvement in sustainability

We are focusing our sustainability efforts on three core areas: addressing climate change risk, supporting a sustainable palm oil sector through traceability and capacity building, and supporting community economic development.

Addressing climate change risk

Traceability and capacity building

Community economic development

In pursuit of continuous improvement, we have joined the World Business Council for Sustainable Development (WBSCD), a global network of 200 businesses committed to transitioning to a more sustainable world. This will allow us to learn from best practices as well as share our perspective as an Asian-based agribusiness.

GAR will contribute to the Agriculture & Food Pathway, aiming to enhance collaboration across the sector and support the Equitable Livelihoods workstream. GAR aims to support the creation of thriving and resilient agriculture and food systems that promote equitable livelihoods for all workers, placing farmers’ prosperity at the heart of food systems. We recognise that action on climate change is not just a necessity but critical business and industry’s future. GAR is committed to achieving net zero by 2050 and has pledged to pursue a pathway limiting global warming to 1.5 degrees Celsius. This goal requires significantly reduced GHG emissions from our operations and Scope 3 emissions in our value chain.

“We recognise that action on climate change is not just a necessity but critical to our business and industry’s future. GAR is committed to achieving net zero by 2050 and has pledged to pursue a pathway limiting global warming to 1.5 degrees Celsius.”

GAR has taken a proactive stance in endorsing the Agriculture Sector Roadmap to 1.5C during COP27. This roadmap is a strategic tool designed to accelerate ongoing efforts with the agricultural commodity sector to combat deforestation. In line with the roadmap, all our palm oil production volumes are on track to meet the criteria of the ‘Delivering’ category of the NDPE Implementation Reporting Framework by 2025.
We are finalising our decarbonisation strategy and roadmap for all entities in which GAR has equity of 50 percent or above. As part of our efforts, GAR has also mapped our carbon emissions footprint across Scopes 1, 2, and 3.

99% Traceability to the Plantation (TTP) for Indonesian supply chain
I am proud to report that GAR has achieved 99 percent Traceability to the Plantation (TTP) for our palm supply chain in Indonesia. Through rigorous efforts and investment in technology, we have successfully mapped our entire palm supply chain in Indonesia. We have also started the traceability process for our global supply chain for palm and non-palm products. We will use the considerable experience we have gained in supplier support and engagement to ensure that all our suppliers are aligned with our sustainability commitments. This achievement is fundamental to GAR’s ability to offer responsibly produced products to our customers. It also positions GAR to be well-placed to respond to incoming destination market regulations such as the European Union Deforestation Free Regulation or EUDR.
Mapping our entire palm supply chain so that our products can be traced back to where they come from through TTP
117 villages in fire-free programme: Desa Makmur Peduli Api (DMPA)
Despite the heightened fire risk during an El Niño year, our proactive measures and stringent fire prevention strategies have limited the impact of fires on GAR’s operations. We know that communities around us need support in tackling and preventing fires, and we continue to expand our long-term collaboration with them through the Desa Makmur Peduli Api programme. Currently, 117 villages are enrolled in the programme, which trains local communities to prevent and suppress fires and educate them on the hazards of fire and haze.
Engaging in long-term fire prevention through Desa Makmur Peduli Api (DMPA)
>100 villages with
>160 Bright Future Initiative projects
The Bright Future Initiative, aimed at supporting local communities’ economic development, continues to make a positive impact, focusing on livelihood improvement and community enterprise development. We have set up more than 160 projects in over 100 villages across our operations in Indonesia. These include organic vegetable, livestock and cash crop farming. We are also helping to upskill local communities and enabling them to market value-added products derived from the projects to boost their incomes. This also helps build local community resilience by offering them greater economic diversification and opportunities.

These achievements highlight our commitment to sustainability, responsible business practices, and community engagement. The expectations of agribusiness to operate sustainably and responsibly are ever-changing and evolving, moving from voluntary standards to regulatory requirements. GAR’s long-standing sustainability commitments and investments have prepared us well for these changes.

“The expectations of agribusiness to operate sustainably and responsibly are ever-changing and evolving, moving from voluntary standards to regulatory requirements. GAR’s longstanding sustainability commitments and investments have prepared us well for these changes.”

Our continuing efforts also support the UN Sustainable Development Goals, particularly goals related to Zero Hunger (SDG2), Responsible Consumption and Production (SDG12), Protection of Life on Land (SDG15), and Partnerships for the Goals (SDG17).

Cash crop farming – one of the skills taught in Bright Future Initiative to improve communities’ livelihoods

Looking ahead with confidence

As we move forward, technology and sustainability serve as our cornerstones in our quest for excellence. We recognise the imperative to harness the transformative forces of technology to drive efficiency, foster innovation, and propel us into new realms of growth. Moreover, sustainability is not merely a green choice; it represents a strategic investment in our future, enhancing our market position and ensuring long-term profitability. At GAR, we believe we can do well and do good. Our journey towards a sustainable future is continuous, and we are grateful for the support of our shareholders, employees, and partners in this shared endeavour.

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Explore the full GAR’s Sustainability Report 2023 and discover how we’re transforming sustainable palm oil.
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