This article first appeared in The Edge Malaysia Weekly on October 28, 2024 - November 3, 2024

SD Guthrie Bhd (KL:SDG) has won the silver award at The Edge Malaysia ESG Awards 2024 in the plantation sector, a recognition attributed to its robust ESG strategy rooted in long-term sustainability.

“As a company with more than 200 years of history, we have survived and succeeded in what we do because we have always anticipated and responded to shifting expectations and changing landscapes,” says SD Guthrie group managing director Datuk Mohamad Helmy Othman Basha.

A cornerstone of the firm’s strategy is the mechanisation, automation and digitalisation (MAD) of its plantation operations. While some industry players remain hesitant, the company has made significant investments in these advancements, even at the expense of short-term profits.

“By implementing MAD, we believe the industry’s current land-to-man ratio (LMR) of 8ha to 9ha per worker can be increased to 11ha to 12ha, leading to a 30% reduction in workforce or 30% higher efficiency,” Mohamad Helmy says, adding that he anticipates a reduction in dependency on foreign labour.

Through concerted efforts over the past four years, the firm is approaching an LMR of 13ha per worker. It is also close to achieving a workforce composition of 30% local workers and 70% foreign workers.

Among its recent accomplishments, the firm is particularly proud of having its net-zero targets approved by the Science Based Targets initiative (SBTi), making it the world’s first palm oil company to achieve this milestone. According to Mohamad Helmy, the introduction of SBTi provided an opportunity to reassess the company’s efforts and obtain independent evaluation confirming that its targets are ambitious and aligned with the latest climate science.

However, maintaining ESG performance has not been without its challenges. The firm faces a continuously evolving regulatory landscape, exemplified by the European Union Deforestation Regulation (EUDR), which was due to take effect this December but has now been delayed by a year.

In anticipation of this, the firm has established EUDR-compliant supply chains in Malaysia, Papua New Guinea and the Solomon Islands. It is also piloting projects with EU customers to streamline document sharing and compliance reporting, underscoring the importance of ongoing customer engagement in its strategy.

To further promote ESG adoption in Malaysia, Mohamad Helmy advocates stronger collaboration in modernising the industry by investing in technology that promotes MAD. He also points out that consumers play a critical role in driving demand for sustainable and ethically produced palm oil.

“Greater awareness of social issues such as labour rights and community welfare tied to certified sustainable palm oil will encourage responsible sourcing practices. When consumers prioritise ethically sourced products, it generates pressure across the supply chain, compelling businesses to improve their social impact,” he says.

Mohamad Helmy also calls on investors and global partners to continue supporting companies committed to social responsibility within their ESG frameworks.

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