Sustain and Gain

I have been beating the drum for Indonesian palm oil producer, MP Evans, since I started posting here ten years ago. You can see how it has performed in the last five years, above. So I’m all right Jack.

When MPE ran down its plantation business in Malaysia and sold its cattle stations in Australia to concentrate on producing palm oil in Indonesia it thought it was being sustainable; and it was by the standards of twenty years ago. Being sustainable meant not chopping and burning rain forests, instead planting on former agricultural lands or degraded forests – the latter is land left after somebody else has destroyed the rain forests. Now there are more bells and whistles. An annual environmental, social and governance (“ESG”) report: 2024, 92 pages. A Taskforce on Climate-related Financial Disclosures (TCFD) report: 2024, 44 pages. The TCFD report has the best pictures but the ESG report is the most interesting for a layman, though it is perhaps a mistake to illustrate the Chairman’s statement with this photograph.

“At the end of 2024, the Group managed a total planted area of 66,100 hectares, including more than 16,200 hectares managed on behalf of local communities through smallholder schemes. These smallholder co-operatives provide local communities with an important source of income and are an essential part of the Group’s success. . . . Over 12,600 people are employed by the Group, of which more than 12,000 are estate workers. The Group also engages contractors for key services such as planting and construction. On estates, we provide housing along with medical, educational, religious and leisure facilities for our workers and their families.

Group mills operate on a principle of zero waste. This is exemplified by the biogas facilities that have been installed at five of the Group’s mills. As a result of the efficient running of those facilities, the Group was able, in 2024, to generate a record amount of renewable electricity of over 38 million kWh. Approximately half of this power was sold to the Indonesian electricity grid, generating additional income. The other half was used internally, saving a substantial amount of money for the Group, and significantly reducing the Group’s reliance on diesel-powered generators.

The Group is committed to setting aside land for conservation purposes, with a focus on areas with high conservation value (“HCV”) or high carbon stock (“HCS”). The area dedicated to conservation grew during the period under review as the Group took on further conservation areas as part of acquisitions made, but also as the Group, for the first time, specifically acquired land exclusively for the purpose of conservation. An area of approximately 1,400 hectares of mangrove forest, close to the Group’s Bumi Mas estate in East Kalimantan, was acquired and is now being actively conserved by the sustainability team based there. Mangrove forests are environmentally important for many reasons, including their richness in biodiversity, and in particular their significant sequestration of CO2. Whilst it is not included as part of the Group’s carbon balance sheet, it is estimated that over 500,000 tonnes of CO2 are sequestered within the area acquired. As a result of the acquisition, the Group’s total conservation area increased to over 8,000 hectares, achieving the Group’s target to have conservation areas representing at least 10% of the planted area managed.” (MP Evans, ESG Report, 2024)

In addition to the above, MPE is transitioning to electric vehicles and of course the electricity will be self-generated. There are two women on the MPE Board and an aspiration to have 25% women in all jobs on the plantations. I think this may be challenging but we will see. Unlike the expensive and economically destructive efforts in the UK to go carbon free MPE is achieving considerable environmental success hand in hand with handsomely rewarding their shareholders – hurrah.