RAM Sustainability Sdn Bhd (RAM Sustainability) has assigned a Silver3 (S3) Sustainability Rating to PLS Plantations Berhad (PLS or the Group).
The Group is predominantly involved in integrated forest, oil palm and durian plantations while it aims to rapidly transform into a local agrofood player through its proposed food security programme in support of the government’s National Agrofood Policy 2021-2030. Any further enhancement of PLS’s rating would require tangible improvements in corporate governance and plantation management best practices.
Importantly, while legislation at the state level permits forest plantations, RAM Sustainability also considered valid issues flagged in relevant publicly available research. In this regard, The Compendium of Environment Statistics compiled by the Malaysian Department of Statistics defines ‘forest plantation’ as an area planted with trees or forest plants, whether local or foreign species, that is wide open at no less than 50 hectares. Forest plantations can include areas located within or outside Permanent Reserve Forests (PRFs). The Group informed us that its forest plantation programmes replenish tree cover, and this contributes to the viability of the PRF area. Given that PLS’s forest plantations are carried out in concession areas on PRF, RAM Sustainability had to objectively assess the benefits of tree cover and intercropping of acacia, eucalyptus, timber latex clone, meranti, durian (durio spp) trees, and other timber species and its consequent impact on biodiversity and other environmental risks.
The ‘No Deforestation, No Peat and No Exploitation’ (NDPE) policy is important for plantation-centric firms, typically those in the oil palm plantation, including PLS. However, there is no public commitment of NDPE policy by the Group. Notwithstanding this, its forest and oil palm plantation subsidiary, Aramijaya Agri & Agro Sdn Bhd, has established its environmental policy and obtained the Malaysian Sustainable Palm Oil (MSPO) certification. The Group, in our view, is still in the early stages of sustainability policy development as different business units currently adopt different policies.
The S3 rating also takes into account PLS’s commitment to producing quality products and services, as evidenced by certifications that it holds: the Good Manufacturing Practices (GMP) certification for its trading business, and the Malaysia Good Agricultural Practices (myGAP), HALAL and Hazard Analysis Critical Control Point (HACCP) certifications. PLS’s plantation segment has established policies on Good Social Practices, Occupational Safety and Health, Child Labour, and Sexual Harassment.
RAM Sustainability is a provider of sustainability services and environment, social and governance analytics. Incorporated on 31 May 2000, RAM Sustainability is a wholly owned subsidiary of RAM Holdings Berhad. RAM Sustainability is the first ASEAN-based provider of sustainability ratings and second opinions and has the distinction of being the first Registered Observer of the International Capital Market Associations’ (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP) and Sustainability Bond Guidelines in ASEAN. It is a member of ICMA’s Advisory Council to the GBP and SBP Executive Committee for a third consecutive term. On 12 August 2020, RAM Sustainability became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme after having been awarded the status by the Climate Bonds Standards Board. For further details, please refer to https://www.ram.com.my/sustainability.