As an agricultural-based company dependent on the environment, IOI is fully cognizant that climate change is a risk to our business. Our “Climate Change Action initiative ("CCAi")” was therefore introduced in 2020 as one of our long-term action plans to mitigate and reduce greenhouse gas ("GHG") emissions from our diverse operations. Our aim is to achieve Net Zero as a group by enhancing existing carbon reduction initiatives while actively exploring new opportunities in minimising carbon emissions through operational efficiency and utilisation of renewable energy which is also in-line with IOI’s 5 strategic priorities.
The Climate Change Action initiative ("CCAi") is reported in alignment with the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD) around four thematic areas (Governance, Strategy, Metrics and Targets, Risk Management) and with reference to the International Sustainability Standards Board (“ISSB”) climate disclosures.
|The management of Climate Change Action initiative ("CCAi") within IOI are embedded within the organisation through;|
|CCAi-related key performance index ("KPI") inclusion for the GMD and its top management as reported in the ASR. The KPI inclusion will be applied to the rest of the organisation to ensure a group-wide accountability.|
|CCAi-related strategy, programmes and development to be overseen by IOI’s Group Sustainability Steering Committee. The committee will also actively support and advocate the initiatives under the Climate Change Strategy which will also include climate action risk and opportunity scenarios.|
|The Group Head of Sustainability and each sustainability units of the business divisions will undertake and oversee the implementation and monitoring of CCAi-related performance at the operations level.|
|Group’s Enterprise Risk Management (“ERM”) framework is used for reviewing the double materiality assessment on climate change to assess sustainability risks and financial impacts of climate change towards the company business.|
|Our Holistic Approach|
|Our approach in implementing the Climate Change Action initiative ("CCAi") and IOI’s strategy is developed around the following commitments:|
|To reduce our climate change impact by setting long-term science-based target versus the baseline to provide clear GHG emissions reduction status.|
|To promote climate action plan and practices through innovation, improved efficiency and support actions throughout the operations.|
|To increase resilience of our business by managing risks and opportunities, forecasting climate scenarios for climate impact valuation and incorporating circular economy in our operations.|
To achieve Net-Zero GHG emissions, IOI is committed to continuously improve our climate change action plans through mitigation and adaptation of our environmental performance within our operations to include:
To further enable IOI to strategise in a more holistic way in responding to the potential climate risks, IOI conducted a quantitative group-wide climate change assessment forecasting climate scenarios for climate impact valuation.
Metrics and Targets
IOI established a five-year emissions reduction target with 4% reduction annually as a short-term benchmark to reduce GHG emissions intensity by 40% in 2025 based on the 2015 baseline. IOI is targeted to possibly achieve negative amounts of GHG emissions or at least carbon neutral for Scopes 1 and 2 by 2030, and has also announced its group-wide GHG emissions target to achieve Net-Zero emissions for Scopes 1, 2 and 3 by 2040.
Progress towards achieving our Net Zero target will be reflected in the graph below:
Footnote: GHG emissions calculation for IOI Plantation is based on RSPO PalmGHG, calculations for refinery are based on ISCC methodology, calculations for oleochemical are based on the Intergovernmental Panel on Climate Change’s (IPCC) and the Institute for Global Environmental Strategies (IGES).
IOI Commitment to SBTi-FLAG – Net Zero by 2040
On 6th March 2023, IOI’s letter of commitment to the Science Based Target initiative in the category of Forest, Land and Agriculture (SBTi-FLAG) was accepted. A formal announcement of IOI’s commitment to SBTi-FLAG was made during our inaugural Panel Discussion on IOI’s Pathway to Net-Zero on 21st March 2023.
The SBTi FLAG commitment requires companies to commit to zero deforestation and develop verifiable science-based emission reduction targets in line with the latest climate science. IOI has committed to setting both near-term science-based emissions reduction targets in line with the SBTi criteria and recommendations as well as net-zero targets.
IOI’s SBTi-FLAG commitment progress is showcased in the SBTi Target Dashboard.
IOI conducted a quantitative group-wide climate change assessment with an expert TCFD consultant to help identify our climate-related transition and physical risks.
Internal Carbon Pricing
IOI is planning to use internal carbon pricing (“ICP”) to enable us to put monetary values on carbon emissions for internal decision-making process and risk analysis involving our investments in low-carbon technology that can help reduce our GHG emissions. An internal working group has been formed to established our ICP. The ICP will consider Scopes 1, 2 and 3 GHG emissions of the Group as well as the effects of future carbon regulations and costs associated to carbon emissions.
Climate Related Risk and Opportunities
The climate-related transition and physical risks analysed are in alignment with the Task Force on Climate-Related Financial Disclosures (TCFD) and are based upon IOI’s specific sourced data as well as data from well-known international climate organisations and other relevant third-parties.
Our Transition Risk
|Type of Transition Risk||Risk||Opportunities|
|Policy and legal|
Our Physical Risk
Footnote: Physical risks resulting from climate change to the operating units were quantitatively assessed by using climate modelling datasets and relevant hazard models based on different severity of climate change scenarios until 2050.
|Type of Physical Risk||Risks||Opportunities|
Our Mitigation and Adaptation
While climate change present significant risk to all the companies at different magnitude, they also create significant opportunity and competitive advantage for companies that are able to recognise those as part of the risks and subsequently explore mitigation and adaptation solutions. Below are the mitigation and adaptation solutions for the identified transition and physical risks in IOI operations:
|Climate Related Risk||Risk Exposure Type||Mitigation Solutions||Adaptation Solutions|
|Transition Risks||Carbon pricing|
|Sea level rise|
Details for our Climate Change Action initiative and progress can be found Here in our Sustainability Report 2020 onwards.