Sustainability at F&N is driven by a deep commitment to making the world a better place to live in. We play our part to help everyone everywhere enjoy the same rights to a good life while focusing on things that matter. This has allowed us to continue providing “Pure Enjoyment, Pure Goodness” to our stakeholders, in tandem with our brand promise.

We are happy to share our 5th Sustainability Report covering the period of 1st October 2020 to 30th September 2021 (FY2021). This report communicates what sustainability means to us, our commitments and the initiatives implemented to achieve our commitments. This year, we are excited to share a key milestone in our sustainability journey as we introduce the refreshed F&N sustainability framework and our 2025 targets.

To ensure relevance of the report, we continue to be guided by the GRI Standards. While, the accuracy of selected Health, Safety and Environment (HSE) disclosure has been externally validated by Lloyd’s Register Quality Assurance (LRQA).

Sustainability Priorities & 2025 Ambitions For F&N

Sustainability is an ongoing commitment, requiring constant re-evaluation to ensure we remain relevant to current issues. In 2020, we conducted a thorough materiality assessment exercise and stakeholder engagement to identify our material issues in Environment, Social and Governance (ESG).

This year, we launched a refreshed ESG framework and set of ambitions for the year 2025. Built on three foundation pillars – Better Business, Better Society and Better Planet, our framework focuses on 18 material topics perceived to be of the greatest importance by internal and external stakeholders. 12 targets are set for F&N Group to drive sustainability performance throughout our business, with additional four supplementary targets for F&NHB to demonstrate our commitment to further drive progress in high priority areas.

Pursuing Sustainability Excellence Amidst Challenging Times

During 2021, while the challenges presented by the COVID-19 pandemic continued to impact our business, F&N remains committed to pursuing excellence, with a focus on our material ESG topics. Our sustainability performance continues to receive external validation from independent assessors, and we will continue our efforts to further our progress to deliver value to our stakeholders.

• For the first time, F&NHB was invited to take part in the 2021 S&P Corporate Sustainability Assessment for inclusion in the S&P ESG Index. As of 12 November 2021, our company performed at the top quintile (86th percentile), ranking among the top ten companies out of 46 assessed in the Beverages (BVG) Industry.
• F&NHB has again been included as a constituent of the FTSE4Good Bursa Malaysia (F4GBM) Index, marking the third year of recognition for our strong Environmental, Social, and Governance (ESG) practices. Our improved ESG rating from last year is a testament that we are making positive strides in delivering value to our stakeholders in an environmentally and socially responsible manner.
• As a major producer of Halal products, we are also proud to be one of the 54 constituents in the newly introduced FTSE4Good Bursa Malaysia Shariah (F4GBMS) Index, which reflects the investments made into ensuring all our products are Halal, and our value chain is Syariah-compliant.
• F&N Group is ranked No. 1 amongst the 12 companies in Asia in the latest WWF Palm Oil Buyers Scorecard 2021, which assesses companies on their commitments and actions in sustainable palm oil.
• Our Sustainability Report 2019 won a Silver at the National Annual Corporate Report Awards (NACRA) 2020, a recognition for the quality of our sustainability disclosures and communication.

NEW STRATEGIES FOR THE NEW NORMAL

One and half years after the outbreak of the COVID-19 pandemic, businesses around the world are still grappling with its repercussions. The ripple effects of the global health crisis had caused many social and economic issues, with disruptions of the globalised supply chain and the resulting uncertainties affecting lives and businesses. COVID-19 had highlighted the interconnection of business, environmental and social issues.

This has reiterated the importance of having strong principles in managing economic and social issues, including consumer health and safety, nutrition, employee health and safety, community development and inclusive growth, and supply chain stewardship. As such, maintaining high standards in ESG performance is critical for business resilience, especially in challenging times.

To this end, we are committed to pursuing sustainable and inclusive growth with our people, business partners and the community while addressing our material areas with our stakeholders to build resilience against external shocks, such as the COVID-19 pandemic.

Safeguarding the Health & Well-being of Our People

Maintaining a high level of hygiene with regular COVID-19 testing and sanitising has been vital in curbing infection risks at our workplace this year. We are thankful for the effectiveness of our proactive safety measures in ensuring minimal impact to our people and operations compared to the high number of community cases within our plants’ vicinity during the year.

It is vital to protect our employees at varying work levels; thus, we worked closely with various Government agencies to expedite the vaccination process for our people and supply chain community. Employees are granted three additional paid leave for their vaccination, and as of October 2021, 96% of our total workforce have completed their vaccination.

We would like to thank the Ministry of International Trade and Industry (MITI) and the Sarawak Disaster Management Committee for their support and assistance during our employee vaccination programme.

Supporting COVID-19 Relief

F&N continues to extend our support towards frontliners and vulnerable communities. To date, over two million products have been distributed directly or through non- governmental organisations/community groups to beneficiaries nationwide. In Thailand, we have donated medical equipment and our products to hospitals for the frontliners and patients. F&N products were also offered to the 20,000 hawkers’ community members for encouragement during this difficult period.

In supporting the Nation’s COVID-19 Immunisation Programme, we helped raise public awareness on the importance of maintaining hydration levels during vaccination periods through the #HidratkanDiriSihatkanBadan campaign. Over 1 million products have been distributed to vaccine recipients & frontliners through the campaign.

The Year in Review

2021 remained extremely challenging operationally due to the ongoing COVID-19 pandemic. Despite that, we continued to build on the success of our previous efforts while implementing new initiatives in pursuing sustainability excellence amidst new challenges.

Human Rights Risk Assessment

We believe full-heartedly in treating all our stakeholders with dignity, respect, equality and consideration for their human rights. To promote the rights of all stakeholder groups, F&N has conducted a Human Rights Due Diligence and Risk Assessment for all business operations for the first time this year. Following this, we have developed a Human Rights Policy and a due diligence manual.

Consumer-centric Innovation

In the past year, we have introduced 13 new products to offer more options in different product categories, healthier options without compromising taste, and convenience through differentiation in packaging to cater to consumers’ evolving needs. Among the new healthier additions are F&N Sparkling range, est Cola Brown Sugar, F&N Bandung, BEAR BRAND Gold Acerola Cherry Milk and the reformulated F&N Magnolia Choc Malt with 50% less sucrose. From 47 last year, we now have 69 products endorsed with the Healthier Choice logo.

We further affirmed our commitment to promoting healthy lives and lifestyles with F&N Group’s new Nutrition Guidelines, based on the World Health Organisation (WHO)’s recommendations. With that, we commit to having all our products free from trans-fatty acids, and >70% of our products should contain less than 5% added sugar.

Propelling Halal Ecosystem

As a leading manufacturer of Halal products, ensuring Halal compliance and maintaining Halal integrity is vital throughout the supply chain for F&N. To further propel the Halal ecosystem in Malaysia, we continue to engage with Halal authorities, public and private stakeholders to maintain high Halal standards.

F&NHB is also actively involved in uplifting the Halal capability of the supply chains and business ecosystems in Malaysia through knowledge sharing forums such as the Securities Commission-Halal Development Corporation Berhad (HDC) Forum 2021, and the 17th Malaysia International Halal Showcase (MIHAS) organised by MATRADE.

Through the Halal Sourcing Partnership Programme, we partner with HDC to build the capacity of small and medium enterprises (SMEs) and elevate their capability to be qualified as Halal vendors for multi-national companies. We are pleased to share that through the programme, we have successfully onboarded two companies as our suppliers and are in the midst of developing three more.

Managing Value Chain Impacts

Today’s consumers actively seek brands that contribute to a greener environment. As such, F&NHB has been working towards creating and capturing value along our supply chain with renewable and recovered inputs. We achieved our goal of purchasing RSPO credit for 100% of our palm oil usage in 2020. Beginning 2021, we have started to purchase 20% RSPO physical certified palm oil for our palm oil usage and balance 80% in RSPO credits. We will increase the proportion of the mass balance approach towards 100% RSPO’s physical certified palm oil by 2025.

Taking the lead in making a difference in consumer packaging waste, F&NHB is one of the ten founding members of the Malaysian Recycling Alliance (MAREA) – a voluntary, industry-led initiative that drives circular economy adoption through extended producer responsibility. Meanwhile, we have also increased the use of recycled materials in our product packaging to 22% this year and target to have all our beverage and dairy packaging material 100% recyclable by 2025 from the current 97%.

The installation of our 10MWp rooftop solar system in Malaysia is well on track. Upon completion in mid-2022, we will be replacing 20% of our electricity requirement with renewable energy and achieving carbon avoidance of about 9,000 tonnes CO2e per year, equivalent to approximately 200 cars driven annually.

CLOSING REMARKS

While 2021 was challenging, we remained firmly committed to pursuing our goals of sustainability excellence. We are proud of our achievements in sustainability over the past year and are excited to embark on this new phase of our sustainability journey towards the new 2025 goals.

On behalf of the Board and management, we will continue to anchor sustainability in the Group and work with all stakeholders to ensure future prosperity for all. Thank you for your continued support.