SUSTAINABILITY

Our community activities are aligned with seven pillars. Hevea Life is about improving the standard of living and quality of life. We work with local charities such as Red Cross for blood donation drives, provision of food aid for needy families and orphanages. Hevea Sports promotes a healthy lifestyle as well as sports activities between Halcyon’s employees and the communities. Under Hevea Learn, we advocate education and development of technical skills. We provide scholarships, salary support for teachers and donation of work desks and books to schools.

Free or heavily subsidised medical treatment and mosquito-borne disease prevention campaigns are some examples of our Hevea Health programmes. In our efforts to provide better nutrition and health care to control the spread of endemic diseases like Malaria and Dengue, we construct bore wells to provide clean water and host regular anti-drug and anti-malaria campaigns.

Hevea Grow is about improving the productivity of smallholder farmers. Examples are the provision of technical assistance to manage their nurseries, bud wood gardens and provide training for budding and tapping to the farmers. Safety and hazard management falls under Hevea Safe where we provide fire and electrical safety training classes for the local communities. Lastly, Hevea Build is about improving the infrastructure of the local communities. We have Build programmes such as the construction of schools, repair of roofs in community buildings like mosques, upgrade of roads to improve access to surrounding villages and other amenities, installations of street lights, support for fire-fighting efforts and other programmes.

As we are heavily reliant on biological resources, we must take an active role in protecting and conserving areas rich in biodiversity. We have enforced a strict zero burning policy on our plantation area and comply with all relevant local legislation and codes. We undertake every reasonable effort to protect and preserve areas of high conservation value and biodiversity concentration. We engage third-party evaluation and assessment groups and as well as regularly engage with civil society groups.

The majority of our factories utilise a chemical-free activated sludge biological effluent treatment system. Discharge water is tested on a daily basis at all factories to ensure that effluent quality is well above legal compliance limits. Our factories are fitted with state of the art wastewater treatment systems. Likewise, air emissions from our facilities are tested for compliance on a regular basis.

Initiatives to reduce, reuse, and recycle waste are standard operational practices. Production machineries are serviced regularly on-site to prolong operational lifespan. Scrap metals, wood, and plastics are recycled. Rubber debris collected from wet lines are donated to surrounding small enterprises for supply to other manufacturers that make rubber products such as shoe soles and carpet backings.

Natural rubber processing is energy intensive. We are concerned about our energy emissions as well as the potential climate change risks to our operations and our communities. Our factory operations currently use energy from the grid and a variety of sources such as coal, diesel and natural gas. We are taking active steps to better manage our energy use and minimise our greenhouse gas emissions. Some of our factories are using crushed palm kernels as an energy source for our dryers. We are also exploring the use of clean, renewable energy to decarbonise our energy portfolio and reduce dependence on fossil fuels.

Our goal is to develop products that are environmentally and socially responsible. These themes form the core of the HeveaPro promise to our customers. We assess not only our final products but also the entire value chain culminating in production. We strive to ensure that our raw materials are sourced sustainably. We have commenced with third-party validation and certification of our HeveaProstandards across all of our factories. Our goal is to get all factories certified by TÜV SÜD, a German certification centre.

We maintain sustainable agricultural practices such as zero deforestation of primary forest and obtaining free, prior and informed consent (FPIC) from affected stakeholders. We encourage our suppliers to uphold the same sustainability standards. However, limited resources or knowledge may pose hindrances for our suppliers, especially smallholders, to embrace sustainability. We welcome this challenge as it presents us with an opportunity to help and influence our suppliers’ business practices. We periodically visit our smallholders’ plantations to provide advice on best practices in agroforestry and agricultural management skills.

We are also focusing our efforts to improve the traceability of natural rubber through our smallholder and agency networks. We have initiated several sustainable programmes to help improve the livelihoods of the smallholders in our supply chain. We will further roll out Rubberway (a Michelin-developed app to trace and map the supply of our raw materials) throughout Indonesia and Ivory Coast in our continued efforts to understand the issues the smallholders faced. We have started working with our customers and NGOs on specific sustainability programmes.

At Halcyon Agri, we continue to ensure responsible supply chain, placing it as one of our long-term priorities. We are committed to a sustainable business practice for a crucial raw material that the world cannot do without it.

Sustainability Performance Targets:

KPI 1: Energy Intensity (kWh/metric tonne (mT))
– SPT 1 : Achieve energy intensity (grid electricity of 190.5 kwH/Mt by 2025# vs a 2021 baseline↑ of 194.5kWh/mt.  This translates approximately to a 2% absolute reduction in electricity consumption by the Asian factories**.

KPI 2: Water Use Intensity (m3/mT)
– SPT 3: Achieve water use intensity (freshwater withdrawals) of 9.02m3/mT by 2025 vs a 2021 baseline of 9.49m3/mT. This translates to approximately 5% absolute reduction in freshwater requirements by the Asian factories**.

KPI 3: Traceable Sourcing Rate (%)
– SPT 3: Achieve 100% end to end traceability for customers, at district level by the Asian factories**+ by 2025.

* Trigger event
# 2025 means 30 June 2025
↑ 2021 baseline means the average of 1H 2021 and 2H 2021
** Asian factories refer to the 26 factories of Halcyon Agri – Indonesia (17), Malaysia (2), Thailand (5), and China (2).

Long-term community investment creates value for both our business and the communities living around our factories and plantations. Areas, where we invest, include education, quality childcare, healthcare, training, job-search assistance and rehabilitation. We also invest in infrastructure such as improvements to make accessibility more convenient and safe within and around the local communities in which we operate.  Examples include installing street lamps, construction of roads leading to schools and mosques and improving access to neighbouring villages. We also invest in training programmes, scholarships for the needy and salary support for teachers. At our factories, we invest in water treatment plants that enable us to recycle the water back to the river and turn sludge into fertiliser that we give to the communities for their usage. Beyond a monetary investment, we also believe in investing with our time to engage with the local communities. Examples include joint exercises for fire safety drills, anti-malaria drives and just simply playing sports with the local communities.

Collaborative working is the cornerstone of sustainable business practices. Halcyon Agri is committed to working with our stakeholders and engages in regular dialogue with customers, suppliers, competitors, industry associations, our employees and their families, to understand and respond to their needs.

We regularly participate in industry dialogues with industry bodies, such as the International Rubber Study Group (IRSG), Indonesian Rubber Association (Gapkindo), Malaysian Rubber Board (MRB), Global Agribusiness Alliance (GAA) and non-industry related interest groups and NGOs. We continue to participate and initiate meetings with customers and environmental NGOs seeking alignment on policies and actionable programmes.

There are about six million smallholders farming rubber throughout the world. These smallholders represent almost 90% of the supply of raw material to the tyre industry. As a responsible company that depends on smallholders, we must engage with them and address the livelihood concern of these farmers and their families. We have initiated several sustainable programmes to help improve the livelihoods of the smallholders in our supply chain. While we grow rubber on our plantations, we also procure from third-party producers. We encourage local, sustainable and accountable procurement via tracing suppliers and direct natural rubber providers in areas of labour practices, indigenous rights, anti-corruption, compliance and others.

Other stakeholders include regulators, financial institutions, investors and shareholders. We hold our annual general meeting as well as quarterly financial results briefing sessions. We ensure we comply with regulations including corporate governance, diversity, taxation, environment, labour, health and safety and supply diversification.

We produce our Sustainability Report based on the SGX Sustainability Reporting Guide and those of the Global Reporting Initiative (GRI). Our sustainability reports are published within the stipulated reporting timeframe and posted on our website.