This article first appeared in The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025
Malaysia, through the New Industrial Master Plan (NIMP) and National Energy Transition Roadmap (NETR), has put in place initiatives and targets to support the transition towards net zero by 2050.
However, policies and frameworks are not enough as it will take effective enforcement to ensure success. It is also important to ensure there is a just transition in realising the government’s green commitments so that no one is left behind.
In the case of the palm oil industry, smallholders need a lot of support to become more sustainable. More resources are needed to ensure they are resilient while adopting more sustainable practices and adapting to climate change.
For example, SD Guthrie Bhd’s (KL:SDG) chief sustainability officer Rashyid Redza Anwarudin notes that when replanting old palms, the company needs to ensure smallholders have access to the best climate-resilient seedlings. “We also need to assist them in becoming more organised and provide them with access to climate financing, which will enable them to operate profitably while contributing to the green agenda,” he says.
“There are many threads that must come together to ensure Malaysia achieves its net zero targets. There are many commendable policies and frameworks that have been and are being developed to guide the Malaysian industry, and with the correct mindset and excellent implementation, Malaysia will succeed. The same is true for all other countries.”
Currently, almost 90% of Malaysian palm oil has been certified under the Malaysian Sustainable Palm Oil (MSPO) scheme, with duplicate certification under voluntary schemes such as the Roundtable on Sustainable Oil (RSPO) and International Sustainability and Carbon Certification (ISCC).
However, more work needs to be done for the industry to achieve net zero or carbon neutrality, which includes the short-term goal of reaching the final milestone of 100% certification under the MSPO as independent smallholders remain the final group to be certified.
The medium-term goal would be to implement all available knowledge and technology in downstream activities in mills and refineries, where all known sources of emissions from plantation waste like empty fruit bunches or palm kernel shells are converted to energy, according to MSPO.
SD Guthrie became the world’s first palm oil company to have both its near- and long-term net zero greenhouse gas (GHG) emissions reduction targets approved by the Science Based Targets initiative (SBTi).
Rashyid says the company has actively engaged with its suppliers on its climate expectations, assessing their climate maturity and supporting them in their net zero journey. “We also obtained external assurance on our 2023 Scope 1, 2 and 3 emissions as well as carbon removals data, which is the first for our sector,” he adds.
SD Guthrie is part of the Malaysian Palm Oil Board (MPOB) project advisory committee and the company provides input for MOPB’s research on sustainable development, climate change and biodiversity.
SD Guthrie also places particular importance on the work it is doing around smallholder inclusion. For example, it is working in partnership with non-governmental organisation Solidaridad to engage with and build the capacity of smallholders in northern Peninsular Malaysia.
The compnay is involved in reviewing the MSPO standards as well.
“We are part of the MSPO GHG Working Group to develop the upcoming GHG calculator, which is due to be released next year. Once developed, the tool will help the entire industry build more robust carbon emissions data,” says Rashyid.
The company is a founding member of the Malaysia Carbon Market Association (MCMA), a consortium of key players from Malaysia’s private and public sectors that aims to further develop the country’s carbon market ecosystem. Through MCMA, SD Guthrie will be involved in the development of the Asean Common Carbon Framework (ACCF), which aligns with Malaysia’s Asean chairmanship in 2025 as well as the country’s target of achieving net zero carbon emissions by 2050.
“Our involvement in MCMA is not just to contribute to the development of the country’s carbon market ecosystem but also to facilitate the development of high-quality carbon projects, including nature-based solutions. This ties in with our ‘Beyond Zero’ headline projects, which is to restore and conserve 100,000ha by 2030 across SD Guthrie’s operations and sourcing landscapes,” says Rashyid.
Beyond Zero, the company’s sustainability framework, was launched in November this year. It captures several strands of ongoing work and also new areas that are in the early stages of development.
These include three headline projects, the first being the restoration and conservation of 100,000ha across SD Guthrie’s operations and sourcing landscapes by 2030, leveraging existing projects, strategic partnerships and initiatives. “We already have to date more than 45,000ha of conservation set aside across our operations,” he says.
The other two projects are the development of a Regenerative Agriculture Framework for Palm Oil by 2025 and the implementation of a pilot programme for the company’s palm oil operations by 2028, and improving the livelihoods of 50,000 smallholders by 2035.
“This is an increase from the current 33,793 smallholders supported by SD Guthrie. Through targeted programmes, we intend to provide the smallholders necessary assistance to increase their yields, improve income sustainably, achieve certification and gain access to new markets.”
Not all companies in the industry consistently calculate and disclose GHG emissions, especially the smaller players. Without baseline emissions numbers, they are unable to set net zero targets, says Rashyid.
With that in mind, he believes the focus for 2025 should be on enabling companies in the industry to consistently measure and report emissions. “This ties in with the current efforts by the MSPO to develop its own platform or methodology for calculating carbon emissions with a release planned for 2025,” he says.
Other than that, Rashyid hopes to see the Forest Carbon Offset (FCO) — developed by the Malaysia Forest Fund (MFF) — materialise as it will support its Beyond Zero projects. The FCO will allow the transfer of emissions reduction from forests to the buyers in the form of carbon offsets.
Technology is no stranger to SD Guthrie and the company will continue looking out for new technologies to facilitate its net zero journey. Rashyid says technology has always been integral to the company’s decarbonisation journey through its investment in renewable energy.
“In 2020, we established our renewables business subsidiary to look into expanding our biogas portfolio as part of our strategy to reduce carbon emissions. To date, we have a total of 18 biogas plants installed at our mills and by 2030, we aim to have 45 biogas plants to capture methane from palm oil mill effluents,” he says.
The company has invested in research and development into GenomeSelect seeds, a super high-yielding oil palm seed that can significantly increase potential yield sustainably. The investment and work started nearly 20 years ago and continues today, with the company having started large-scale commercial planting of these seeds.
“Technological innovation will continue to be a priority as we look for newer technology that can allow us to accelerate our net zero journey,” says Rashyid.
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