This is the third time Sime Darby Bhd has won The Edge Billion Ringgit Club Best CR Initiatives award. It bagged the first one in its previous incarnation in 2014 and thereafter in 2018, not long after it drew up its Human Rights Charter in FY2016, which incorporated the Protect, Respect and Remedy framework outlined by the United Nations Human Rights Council. At the time, it won the award jointly with Sime Darby Plantations Bhd, which also adopted the charter following their demerger in November 2017.
This year, Sime Darby, which employs over 22,000 employees in 19 countries and territories, is winning the award on its own.
A glance at its latest annual report will show the group’s numerous corporate social responsibility efforts, from reducing water consumption that includes wastewater recycling and rainwater harvesting, to making its yearly contributions to Yayasan Sime Darby (YSD) to support various community development programmes — be it in education, environment, community and health, sports, or arts and culture. YSD is the philanthropic arm of Sime Darby, to which the group contributes RM20 million a year.
But what stands out in the report is how the group has further strengthened its commitment to protect the environment and ensure its people behave responsibly in the communities they operate in by putting in place a new holistic Sustainability Blueprint in FY2021.
“The blueprint is fundamental to how we want to do business to create long-term value for our stakeholders and to strengthen our commitment to the highest standards of corporate governance, environmental sustainability and social responsibility,” says chairman Tan Sri Samsudin Osman in the group’s Annual Report 2022.
“We believe our focus on sustainability not only strengthens our social licence to operate but also enhances our ability to run our businesses efficiently, competitively and generatively into the future,” says Samsudin.
The blueprint was developed around four key sustainability themes: i) optimising the group’s environmental and social footprint; ii) inspiring its employees to deliver meaningful change; iii) engaging in sustainable partnerships; and iv) driving sustainable innovation and technology. They aim to embed environmental, social, governance and economic factors into the group’s strategic decision-making.
“Within the past year, the blueprint’s relevance to the group’s sustainability agenda has expanded rapidly through the applicability of the seven Flagship Initiatives. The initiatives provide operational guidance and a mechanism for environmental, social and governance (ESG) reporting across the business. An internal governance structure supports the integration and reporting of the initiatives. This structure aligns with the overarching oversight of ESG practice at Sime Darby,” says group chief safety and sustainability officer Glenn Sheahan.
The seven initiatives are as follows: i) investment in renewable energy across all countries of operation; ii) responsible supply chain; iii) investment in cleaner, more efficient technology; iv) mobility as a service; v) consolidate ESG understanding through training and development; vi) corporate social responsibility activities across all countries of operation; and vii) embed inclusion and diversity in human resources and operational activities.
And guided by this blueprint, the group has set sustainability targets for itself, such as a 30% reduction of emissions by 2030 from 2020 levels, and making more than 50% of the products in its portfolio by 2025 more energy efficient than its 2020 portfolio. It is also targeting a minimum of RM250 million in investments in ESG innovation by 2025.
According to Sheahan, the blueprint — developed after a year-long engagement process with its key internal and external stakeholders — has been instrumental in guiding the group’s businesses through the transition to a lower carbon economy. “Utilised as a roadmap for aligning to social and environmental opportunities, the blueprint supports group strategy, risk management and our Value Creation Plan (VCP),” he says.
The VCP is Sime Darby’s five-year plan that guides the group in its strategy and decision-making to ensure it stays on track in growing core businesses, enhancing revenue and optimising costs, and rationalising non-core assets. The plan is reviewed yearly.
“Throughout the organisation, the blueprint is also used as a tool to instil, shift or enhance a culture based on more sustainable practices. During the past year, a sustainability-focused culture has rapidly expanded throughout the organisation due to the influence of the blueprint and its corresponding training,” says Sheahan.
Sustainability-based initiatives across the group have been and will remain at the forefront of its future planning and operational decision-making, he adds.
“We will be focusing on making further progress on our sustainability targets, ensuring better alignment with the initiatives and their corresponding activities. Together with our VCP, we are confident the blueprint will drive the group’s capacity to deliver a sustainable future and sustained value to our stakeholders,” says Sheahan.