Sustainability Report

In year 2021-2022, Carotino Sdn Bhd (Carotino Refinery) has been audited by BSI Services Malaysia Sdn. Bhd. for RSPO Supply Chain Certification with the scope of certification “Purchase of certified CPO and refined palm products, processing and sale of certified CPO, refined palm products, Glycerol, Medium Chain Triglycerides, Methyl Ester, Biodiesel and Fatty Acids.

The audit is based on the latest RSPO Supply Chain Certification Standard (Revised February 2020). Site visit to the plant, warehouse, weighbridge and process were conducted. Document review on supply chain for RSPO segregated production (physical separation), traceability and sales documents were also conducted in the site office. The audit resulted positive and confirmed that Carotino Sdn Bhd (Carotino Refinery) was capable to meeting the new RSPO SCC Standard February 2020. 

 

Commitment and Communication

Our commitment to sustainable palm oil production is reflected in our sustainable palm oil policies (RSPO Policy), Code of Conduct Policy and Social Compliance Policy which endorsed by our company’s top management. These policies include topics of sustainability, business ethics, labour standards, occupational health & safety and environment. It was well communicated to our stakeholders such as employees, suppliers, customers and consumers through our web information, email communication, briefing and training. Do refer our web on Company Policies for more detail. 

Our internal rules of conduct also apply in cooperation with our suppliers and partners; we are convinced that responsible action should extend beyond the limits of our company. We work with our suppliers, partners and external service providers to get their respect and act as per our principles. We also hope their obligation towards their own upstream suppliers to ensure traceability and transparency in the supply chain system. In order to achieve this objective, due diligence in form of self-disclosure questionnaire will be given to our suppliers and request for completion before commencement of supply. Review will be carried out at least once every three years to ensure update information obtain for further improvement. Those positive impacts will be promoted where negative ones should be eliminated. In the self-disclosure questionnaire, series of question includes topics of health and safety, social compliance, business ethics and information of plantations where FFB source will be asked. During this interaction, our company policies will be also communicated with our suppliers. 

 

Annual Communication of Progress

Carotino Sdn. Bhd. was a member of RSPO since 10/05/2006, being a responsible and transparent member, Annual Communication of Progress was submitted annually to RSPO diligently since year 2011. Detail can be referred to RSPO website member’s page.

Based on 2021’s ACOP, we having eight independent out-growers and eighteen smallholders who supply FFB to mills under the Group. The supplier’s name and location information are listed here.  

Our Carotino Palm Oil Mill are RSPO certified under identity preserved (IP), where 100% crops are supply form own plantations. Meanwhile, Melewar Palm Oil Mill and Asia Palm Oill Mill are RSPO certified under mass balance (MB), where 94% of crops are supply form own plantations and balance 6% of crops are supply from third party suppliers. The above mills are fully certified with RSPO, ISCC and MSPO except the newly purchased mill namely Lahad Datu Palm Oil Mill which was not running on this time.

In order to meet our sustainability commitments, we will ensure that our supply chain work towards the same standards that we uphold. We are committed to creating a traceable and transparent supply chain. Carotino Refinery recognizes the importance of traceability from refinery to palm oil mills and over time to plantations. Carotino Refinery are sourcing from 45 third party supply mills (crude palm oil) and our list of supply mills (both RSPO certified and non-certified) is publicly available here. This information is also publicly available on RSPO website member’s page and is updated from time to time.

The Group have 17 oil palm plantations located in Pahang and Sabah, all plantations are fully certified with RSPO, ISCC and MSPO. Except, the newly purchased property from TSH Resources Berhad. This estate has been certified with MSPO and we are planning RSPO certification for this property by June 2023 for target of 100% RSPO certification.

 

Zero Burning Policy

To ensure and to promote the nutrient recycling into the ground, all old palms standing in the field will be felled, chipped, stalked and decomposed in the field naturally without using fire as our Group prohibited the form of replanting by using fire as part of field preparation.  There is also no use of fire for pest control unless in exceptional circumstances, i.e. where no other effective methods exist, and with prior approval of government authorities.  Our Group committed in the implementation of “Zero Burning Policy" in the event of palms cultivation and process of replanting.

 

Peat Inventory

Under RSPO Guidelines all estates which have been planted with oil palm on peatlands (organic soils) have to conduct a drainability assessment (DA) of their peatland areas. However, if an area of organic soils (peats) has not yet been planted, these areas can now no longer be planted. As a company that committed to NDPE policy, the Group truly committed to this policy.

To get the true understanding of peat profile under the Group, the peat identification and drainability assessment was carried out on 27-29 Jun 2019 by a surveyor team lead by Dr Paramananthan Selliah from Param Agricultural Soil Survey (M) Sdn. Bhd.

Two lowland peats (Gambists) namely Liku and Erong series were identified in one of the estates located at Kinabatangan, Sabah namely Pahang Oil Palm Estate 2.  The extent of Liku and Erong series in this estate are 76.43 ha and 32.73 ha, respectively. Based on the profile of types of organic soils, mean height of the water level in the canal or river draining the area, shape and the elevation of the peat dome surface, thickness or depth of the organic (peat) layer, shape and the elevation of the underlying mineral substratum. The surveyor opinion that the organic soil areas can be replanted in the near future.

The peat inventory report and DA was then submitted to RSPO, since the planting of oil palm was completed before 11 June 2019 thus, special exemption from conducting DA was given by RSPO. In order to guide consistency on method of peat management, a guideline name as GUIDELINE FOR PEAT MANAGEMENT was formed to provide technical recommendation for peat management in terms of drain construction, water level management and subsidence monitoring with the ultimate aim to maximise the palm growth, environmental balancing and sustainable long-term productivity.

 

Fire Hotspot

The RSPO Fire Hotspot Hub was developed in response to the pervading problem of forest fires, which continue to be one of the toughest challenges facing by the palm oil industry and are predominantly caused by illegal “slash-and-burn” forest clearing practices. When a hotspot is detected and confirmed within the RSPO member’s concession, the alert will reach the member via an email with detailed information related to the hotpots or fire that occurred on the ground level will be sent by the RSPO Firewatch team, part of the GIS Team under the RSPO Integrity Unit. All responses collected from the member will be saved into the RSPO database and will be published on the RSPO Hotspot Hub platform according to their consent. The public can view the hotspot information, as well as the member’s management action for fire prevention in the future.

As per today, total 5 Fire Hotspot alert were received by the Group where detail are listed here.

 

HCV Assessment

All estates under the Group were assessed against his HCV value based on the concern and requirement of RSPO by Wild Asia Sdn. Bhd., except the newly purchased property namely Hwa Li 2 where the assessment was conducted by Anna Wong and the team between October 2015 to February 2016. In order to meet the HCV concern and requirement of RSPO, Wild Asia Sdn. Bhd. was appointed to re-assess the HCV value for the newly purchased property and expect to be conducted by end of October 2022, the re-assessment result will be updated later when the report finalises.

HCV assessment for Carotino Production Unit consists of Asia Oil Palm Estate 1, Pahang Oil Palm Estate 1, Maran Estate, Carotino Estate and Hwa Li Estate 1 was conducted between 13th and 17th January 2009, the followings were assessed: -

Most estates under Carotino Production Unit had at least one major river flowing through or adjacent to its boundary, the river basin or catchment of each river was used to scope out potential HCVs landscapes and other features. Most of the land within the estates was under mono-culture of oil palm agriculture, and “pockets” or “islands” of other habitats were scarce. In some areas along the periphery of the estates, areas of logged lowland and hill forest (designated as “Permanent Forest Reserve”) were present and parts of these were surveyed where possible. Biological diversity for Pahang Oil Palm Estate 1 was relatively high, total species recorded were: 160 bird species, 26 mammals (excluding bats), 7 reptiles, 11 amphibians, 29 dragonflies, 16 butterflies and 8 fish species. The most commonly recorded species in estates were Oriental Magpie Robin, White-throated Kingfisher, Spotted Dove, Crested Serpent Eagle, Changeable Hawk Eagle and Red Jungle Fowl. From the perspective of High Conservation Value Forests (HCVFs), as defined by WWF & Ikea (2003), the riverine forests, river backswamps, and lowland forest remnants can be considered as HCV 1 (rare endangered species – IUCN listed species) and HCV 3 (rare habitat – all lowland freshwater habitats are rare and endangered). In order to mitigate those negative impacts and to protect the positive ones, long terms HCV improvement plan which subjected to yearly review has been established to guide consistency of implementation.

HCV assessment for Asia and Melewar Production Unit consists of Gerola Estate, Tye Yang Estate, Melewar Estate 1, Melewar Estate 2, Asia Oil Palm Estate 2, Pahang Oil Palm Estate 2, Pahang Oil Palm Estate 3 and Hwa Li Estate 3 was conducted between 3rd and 10th April, 2011. The same HCV concerns and aspects of assessment like Carotino Production Unit were assessed.

Based on the site investigation and desktop review, there are limited HCVs found directly within the estates and this is not surprising considering the maturity of plantings (first established in 1986). However, it is noteworthy that Gerola estate borders onto a major HCV in the form of the Ulu Segama Forest Reserve, a large forested reserve that extends far into the interior of Sabah. The site was also once part of a larger forested floodplain and very little of this original vegetation is left. There are also a number of typically wetland species that are using the site and are either ERT species (e.g. Storm Storks, Black Hornbill, Oriental Darters) or protected by Sabah law (e.g., crocodile, small clawed otters). In order to mitigate the negative impacts and to sustain the positive values, long terms HCV improvement plan which subjected to yearly review has been developed to guide consistency of implementation.

HCV assessment for Takon Production Unit consists of Pelita Estate, Muis Melewar Plantation 1 and Muis Melewar Plantation 2 was conducted on March 2015.

The assessment was conducted in accordance to the new guidelines put forward by the HCV Resource Network. According to the development history of the estates, approximately 4,342.35 ha (~63% of planted area) of logged secondary forest has been converted into oil palm between 1995 and 1999. Conversion post 2005 (introduction and trial of RSPO P&C) has only been from cocoa agriculture, and no new plantings has been conducted after the introduction of the New Planting Procedure by RSPO.

Potential presence of HCV 1, 2 and 4 were identified in the estates:

Biodiversity assessments found a number of globally important species, especially close to the nearby forest borders and along riparian areas. The southern area of the Pelita Estate has the least number of species and Muis Melewar Plantation 1 was found to have fewer species compared to Muis Melewar Plantation 2. Put forward on commitment of HCV protection and to guide consistency of implementation, the same practice of long terms HCV improvement plan which subjected to yearly review has been established to ensure long terms achievement and continuous implementation.

 

Environmental Impact Assessment

An Environmental Impact Assessment (EIA) is a process of evaluating the likely environmental impacts of a project or development, also taking into account of socio-economic, cultural and human-health impacts. The assessment aims to identify areas of potential impacts, beneficial and adverse alike, based on a combination of on-site observations and review of documentation. It also strives to assess existing environmental management systems and the mitigation of activities that are legislated by law, such as the Environmental Quality Act (EQA) and the Sabah Environmental Protection Enactment (SEPE), as well as relevant criteria to adhere under the terms of RSPO membership.

The assessment was primarily focused on the identification of significant environmental aspects. In other words: the activities of oil palm plantations and mills that pose a higher risk of environmental impact. Each of the major risk areas were assessed through a combination of field visits, on-site interviews with key personnel and a review of relevant documentation/records. This was done in order to review the current system in place and to identify potential weaknesses in the work system that may prevent adequate management of environmental impacts in the future.

The environmental impact assessment for Carotino Production Unit consists of Asia Oil Palm Estate 1, Pahang Oil Palm Estate 1, Maran Estate, Carotino Estate and Hwa Li Estate 1 was conducted between 14th to 17th October, 2008 by a team of assessor from Wild Asia Sdn. Bhd. 

Based on the site investigation and desktop review, the following concerns were highlighted for further improvement: -

To move forward and commitment toward environmental impact improvement, the significant environmental aspects and impacts were identified and the long terms environmental improvement plan which subjected to yearly review was established for Carotino Production Unit to guide consistency of implementation and long terms improvement.

The environmental impact assessment for Asia and Melewar Production Unit consists of Gerola Estate, Tye Yang Estate, Melewar Estate 1, Melewar Estate 2, Asia Oil Palm Estate 2, Pahang Oil Palm Estate 2, Pahang Oil Palm Estate 3 and Hwa Li Estate 3 was conducted by Wild Asia Sdn. Bhd.  between 3rd and 10th April, 2011.

The assessment focused on the significant environmental aspects, in other words activities of the plantation or mills that have a higher risk of environmental impact. Each of the major risk areas were assessed through a combination of field visits, interviews with key personnel or a review of documentation or records. A number of significant environmental aspects were identified through this process. Apart from an assessment of the Environmental Impacts, the team also undertook a preliminary assessment of environmental management capacity. This was done to attempt a review on current system in place and to identify potential weaknesses in the system that will prevent adequate management of environmental impacts in the future.

Significant environmental impacts were sighted as a result of estate and mill production activities. These will need to be addressed through a phased approach to ensure continuity in improvement and an effort towards minimising these impacts. Total 11 significant environmental aspects were identified and these have been grouped into 4 broad categories of impact:

Cursory assessment of other likely environmental impacts particularly those impacting nearby local communities and smallholders were also identified and the following impacts highlighted:

A preliminary assessment of environmental management capacity revealed less than satisfactory

levels in terms of robustness of environmental policy, planning, operational and corrective activities as well as management review of environmental plans were also conducted. Recommendations to improve on environmental policy, communication modes have been provided. Based on those aspects identified, proposed corrective actions and suggestions from assessors, the long terms environmental improvement plan which subjected to yearly review was established for Asia and Melewar Production Unit to guide consistency of implementation and long terms improvement.

The Environmental Impact Assessment (EIA) for Takon Production Unit consists of Pelita Estate, Muis Melewar Plantation 1 and Muis Melewar Plantation 2 was conducted by Wild Asia Sdn. Bhd. in 6th to 16th April 2015.

The assessment was primarily focused on the identification of significant environmental aspects. In other words: the activities of oil palm plantations and mills that pose a higher risk of environmental impact. Each of the major risk areas were assessed through a combination of field visits, on-site interviews with key personnel and a review of relevant documentation/records. A preliminary assessment of the overall environmental management capacity at the various production units was also undertaken. This was done in order to review the current system in place and to identify potential weaknesses in this system that may prevent adequate management of environmental impacts in the future.

Total 15 significant potential environmental impacts deriving from operational activities were identified and subsequently assessed, these includes of:

Based on the prioritization of significant environmental risks and their accompanying key impacts, number of actionable points were identified for further improvement. In order to guide consistency of implementation and long terms improvement, the long terms environmental improvement plan which subjected to yearly review was established for Takon Production Unit for continuous implementation.

 

Social Impact Assessment

The aim of a social impact assessment (SIA) is to develop an understanding of the impact of current operations on people, be it internal or external. The assessment is broken up into two steps. The first involves the mapping of people impacted by the oil palm operations (also called a stakeholder analysis). The second step involves onsite social factfinding. Besides field observations, documentation review and one-on-one interviews, the method of Focus Group Discussions (FGD) was also used for social fact-finding.

The social impact assessment for Carotino Production Unit consists of Asia Oil Palm Estate 1, Pahang Oil Palm Estate 1, Maran Estate, Carotino Estate and Hwa Li Estate 1 was conducted between 14th to 17th October, 2008 by a team of assessor from Wild Asia Sdn. Bhd. 

Based on the site investigation and desktop review, the following concerns were highlighted for further improvement: -

To move forward on commitment to social impact improvement, the significant social aspects and impacts were identified and the long terms social improvement plan which subjected to yearly review was established for Carotino Production Unit to guide consistency of implementation and long terms improvement.

The social impact assessment for Asia and Melewar Production Unit consists of Gerola Estate, Tye Yang Estate, Melewar Estate 1, Melewar Estate 2, Asia Oil Palm Estate 2, Pahang Oil Palm Estate 2, Pahang Oil Palm Estate 3 and Hwa Li Estate 3 was conducted by Wild Asia Sdn. Bhd.  between 3rd and 10th April, 2011.

The first step in this Social Impact Assessment (SIA) was to conduct an estate wide stakeholder mapping exercise. Key stakeholder groups were identified along with the relationship to the business, frequency of communication and communication mode. Significant social impacts identified through focus group discussions, workshops and site visitation were included. Followings are concerns highlighted:

In most areas, there have been action and steps taken to address these key issues however proper documentation, communication and assessment of worker understanding needs to be emphasized. As a follow up to the field visit, a workshop was conducted by Wild Asia, to review the key outputs from the SIA assessment. During the workshop, effective measures and guidelines were identified to address the issues arising from the SIA. Inputs and feedback from the various estate and mill managers were incorporated to ensure corrective actions that were viable and can be effectively implemented were derived. Based on these proposed corrective actions, the long terms social improvement plan which subjected to yearly review was established for Asia and Melewar Production Unit to guide consistency of implementation and long terms improvement.

The Social Impact Assessment (SIA) for Takon Production Unit consists of Pelita Estate, Muis Melewar Plantation 1 and Muis Melewar Plantation 2 was conducted by Wild Asia Sdn. Bhd. in 6th to 16th April 2015.

The assessment aims to identify high risk areas of social impact likely to be present based on a review of documentation, consultation with relevant stakeholders (internal and external) and an onsite observation which in line with the 2014 MYNI RSPO Requirements. A preliminary scoping assessment of the overall social management system at the various production units was also undertaken to review the current system in place and to identify potential weaknesses in this system that may prevent adequate management of social impacts.

Significant social impacts identified through focus group discussions, document review and site visitation included. A social management system and a list of total 6 significant social risks areas were assessed for the SIA. These social risks have been grouped into 4 broad categories of impact:

To move forward on commitment to social impact improvement, the significant social aspects and impacts were identified and the long terms social improvement plan which subjected to yearly review was established for Takon Production Unit to guide consistency of implementation and long terms improvement.

  

Recruitment, Selection and Hiring

The capabilities needed for the job both in terms of hard skills and soft skills which related to the duties and responsibilities of the job will be highlighted during recruitment process. Listed in the following are considerations during recruitment and selection: -

(to confirm employment whose above 18 years old, age screening verification will be conducted prior recruitment based on recognized photographic identification such as identification card, passport, etc)

The hiring of the interested candidate will be made once both parties agree on the terms and conditions stated in contract of employment. Decent Living Wages (DLW) is paid to all workers by phase, including those on piece rate, for whom the calculation is based on achievable piece rate during regular work hours. No contract substitution should be involved during the process of hiring. Changes to the employment agreement or contract are prohibited unless these changes are made to meet local law and provide equal or better terms. Post-arrival orientation should be conducted to new employees to let them engaged with the company culture both ethic and policies. The following are also disallowed under employment: -

 

Gender Equality and Opportunity

Although operating in traditionally male dominated industries, we are progressively working towards improving female representation at all levels of our workforce. In our group, we have 2 women in board of members and 2 women in senior management. We respect gender equality, no discrimination and women right. The outstanding employee will always attract the management attention. Qualifications, both technical skills and behavioural factors, will be a targeted skill for promotion. Following list are some factors to be considered for promotion but not limited to;

Equal opportunities and no personal discrimination will be respect during the process of promotion

 

Complaint and Grievances

Carotino Refinery strives to investigate and address all complaints and grievances from our stakeholders. If there is any complaints, grievances, suspicion of / or actual bribery, corruption, malpractice or irregularities amongst our employees and stakeholder (suppliers), please report it to our nominated personnel as follow:

Name	Designation	E-mail Address
Dr Vishwajit Saraph	General Manager	saraph@carotino.com

 

Feedback from our stakeholders is welcome for our continual improvement